
Class HJ78 I *h 
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COPmiCHT DEPOSIT. 



WORKMEN'S COMPENSATION 
AND INSURANCE 



Williams College 

DAVID A. WELLS PRIZE ESSAYS 

IWumber 5 

WORKMEN'S COMPENSATION 
AND INSURANCE 



BY 

DURAND HALSEY VAN DOREN 
A.B., LL.B. 




PRINTED FOR THE 

DEPARTMENT OF POLITICAL SCIENCE 

OF WILLIAMS COLLEGE 

#£ dBoffat, |?ar& ana Company new l^orfe 

1918 






Copyright, 1918, by 
MOFFAT, YARD & COMPANY 






Qa A 5 080 99 

NOV -9 1918 
.1* 






to 



TO MY 

FATHER AND MOTHER 
IN LOVE AND GRATITUDE 



FOREWORD 

The legislative tendency of to-day is unquestion- 
ably toward the rapid socialization of the state. 
In this movement, workmen's compensation laws 
and other statutory provisions for the insurance of 
the industrial hazard are playing an increasingly 
important part. By reason of the adoption of such 
measures, first in European countries, then in the 
colonial possessions of the great powers, and finally 
in the vast majority of the commonwealths which 
go to make up the United States of America, an 
impressive body of precedent and a wide divergence 
of views on matters of legislative policy have de- 
veloped, to the study of which writers on economic 
and social questions are yearly devoting greater 
attention. 

The present work is in answer to the demand for 
a brief critical presentation of the subject, as dis- 
tinguished from an exhaustive and non-committal 
treatise. It was written in successful competition 
for the 1917 award of the David Ames Wells prize 
of $500, offered annually to seniors of Williams 

vii 



vffi FOREWORD 

College and graduates of not more than three years' 
standing, for the best essay on a subject in the field 
of political science assigned by a committee of the 
Faculty. The author is a graduate of the class of 
1914. The essay method of treatment has been fol- 
lowed throughout, and matter of interest to the 
scholar and the legalist rather than the general 
reader is relegated to footnotes. 

Every effort has been made to keep the text free 
from inaccuracies. Perfection in this regard, how- 
ever, is hardly to be expected, especially in view of 
the mass of material through which the student 
of workmen's compensation is forced to wade, and 
the constant changes in the subject introduced by 
new legislation, court decisions, and administrative 
action. The most that the author dares to hope is 
that his unintentional transgressions will prove to 
have been few. 

My thanks are due to the members of the Faculty 
Committee on the Wells Prize Contest, consisting 
of President Harry A. Garfield, Prof. Walter W. 
McLaren, and Prof. Theodore Clark Smith, and 
particularly to Prof. McLaren for valuable sug- 
gestions and unfailing sympathy and assistance. 

D. H. V. D. 

Washington, July, 1918. 



CONTENTS 

CHAPTEB PAOi 

Fobewobd vii 

I Undeblying Pbinciples 8 

II The Rise of Workmen's Compensation . . 20 

III Questions op Constitutionality . . . 56 

IV Compensation Legislation in the United 

States 84 

V Insurance Featubes 134* 

VI How It Works in New Jeesey .... 178 

VII The Attitude of Labor . . . . . . 239 

VIII The Soldiers' and Sailors' Insurance Act 265 

IX Requisites of the Ideal Law . . ' . . 296 

BlBLIOGEAPHY .811 

Index 5 . . . 81$ 



WORKMEN'S COMPENSATION 
AND INSURANCE 



WORKMEN'S 

COMPENSATION 

AND INSURANCE 

CHAPTER I 

UNDERLYING PRINCIPLES 

A careful text-book writer has defined workmen's 
compensation acts as "enactments which embody the 
principle that the workman is entitled to compen- 
sation for injuries received in the course of his 
employment." 1 Accepting this description as ade- 
quate for the purposes of an introductory chapter, 
we are led to ask : "Where and when did this prin- 
ciple first gain credence; and why was legislation 
necessary to engraft it on our law?" Until these 
questions are answered, an intelligent study of 
workmen's compensation as it exists to-day is im- 
possible. 

For centuries before the modern legislation with 
which we are to deal, the law had treated contracts 

i Boyd, Workmen's Compensation, p. 205. 

3 



4 WORKMEN'S COMPENSATION AND INSURANCE 

of employment as purely personal agreements (the 
interest of the public in them being overlooked) ; 
and controversies arising out of them had been dis- 
posed of by the courts with an eye chiefly to mulct- 
ing the party at fault for the benefit of the party 
injured. Especially has this been true of suits by 
the workman to recover damages from his employer 
for injuries suffered in the course of the employ- 
ment. The question put by the law in such cases 
has long been: "Was the injury due to the posi- 
tive fault or culpable negligence of the employer ?" 
Unless this query were answered in the affirmative, 
damages or compensation for the injury could not 
be recovered, and the unfortunate workman was 
left to his fate. Such was the common law of 
negligence. 

It will readily be conceded that this narrow code, 
even if calculated to work substantial justice in the 
rare cases where the relation of master and servant 
was a purely personal and intimate one, is wholly 
unadapted to the conditions of modern industry, 
where factory labor is the rule and personal con- 
tact of employer and employed is the exception; 
yet it has been made even harsher and more anach- 
ronistic, in countries following the English law, 
by the importation of three peculiar doctrines. 



UNDERLYING PRINCIPLES 5 

These are known as the contributory negligence 
rule, the fellow-servant rule, and the doctrine of 
assumption of risk. 

The contributory negligence rule is not peculiar 
to the law of master and servant, but is broadly 
applicable to all cases of accidental injury. 
Briefly, it is that if the party injured has by his 
negligence contributed to the risk which occasioned 
his injury, he cannot recover compensation for such 
injury in an action against the carrier, master, or 
other negligent party. Contributory negligence of 
the injured workman is a perfect defense for the 
employer in such suits. 2 The test of whether it 
exists in a particular case has been well formulated 
in a leading Indiana decision: "If the risk is so 
great and immediately threatening that a person of 
ordinary prudence, under all the circumstances, 
would not take it, contributory negligence is estab- 
lished. If the risk is not so great and immediately 
threatening but that a person of ordinary pru- 
dence, under all the circumstances, would take it, 
contributory negligence is not established." 3 

The fellow-servant rule, or the "doctrine of com- 
mon employment," as the English call it, is said ta 

zBurdick, Law of Torts (3d Ed.), p. 198. 

s Davis Coal Co. v. Poland (1901), 158 Ind. 607, 62 N. E. 492. 



6 WORKMEN'S COMPENSATION AND INSURANCE 

have originated in the case of Priestley v. Fowler 4 
in 1837; though it has been pointed out that that 
case is authority for no such broad proposition. 5 
But whatever its origin, it has taken a mighty hold 
on English law, and is the prevailing doctrine in 
jurisdictions where it has not been abolished by 
statute. 6 The general rule has been stated as fol- 
lows : "One who enters the service of another takes 
upon himself the ordinary risks of the negligent 
acts of his fellow-servants in the course of his em- 
ployment." 7 Such a proposition will be seen to be 
a natural outcome of the old theory that contracts 
of employment are personal contracts, under which 
the master assumes no responsibility except for his 
own personal acts or omissions ; but it is grotesquely 
inapplicable to modern industrial conditions, where 
the workman often never sees his real employer. 
It is true that the rule has been modified in some 
jurisdictions so as to give the workman a right of 
action against the employer in cases where the fel- 

*3 M. & W. 1, 49 R. R. 495 (1837). 

« Burdick (supra), p. 202; also Pease, J. G., in 15 Columbia Law 
Review, at p. 509. But see Dawbarn, Employers' Liability and 
Workmen's Compensation (4th Ed.), at p. 2; and Boyd, Workmen's 
Compensation, at p. 26, for the conventional view of the origin of the 
fellow-servant rule. 

« Burdick (supra), p. 203. 

* Randall v. B. & O. Ry (1883), 109 U. S. 478, 483. 



UNDERLYING PRINCIPLES 7 

low-servant's negligence can reasonably be imputed 
to the master on the theory that the former is so 
completely clothed with the powers and discretion 
which the master could exercise if present as to be 
the master's alter ego rather than a true fellow- 
servant. 8 But even so the rule serves to defeat 
recovery in that large class of cases where the fel- 
low-servant's negligence, though not imputable to 
the master personally, is clearly a risk inherent in 
the employment rather than a mere independent 
tort of the fellow- servant himself. Speaking of 
the rule, Augustine Birrell has said: "The doc- 
trine of common employment was only invented in 
1837. Lord Abinger planted it, Baron Alderson 
watered it, and the devil gave it increase." 9 

The doctrine of assumption of risk is related to 
the fellow-servant rule, and really embraces the lat- 
ter. "Under this principle every risk which an 
employment involves after the master has done 
everything he is bound to do for the purpose of 
securing the safety of his servants (including the 
employment of other servants) is assumed, as a 

8 Bradbury, Workmen's Compensation and State Insurance Law 
<2d Ed.), p. 5. 

9 Quoted from The (London) Times of May 18, 1897, in an article 
on Workmen's Compensation and the Theory of Professional Risk, 
by F. P. Walton in 11 Columbia Law Review, pp. 36-50, at pp. 38-39. 



8 WORKMEN'S COMPENSATION AND INSURANCE 

matter of law, by each of those servants." 10 And 
the broad proposition has been stated by another 
writer thus: "When a man enters another's em- 
ploy he does so with his eyes open, and with a 
knowledge of the risks incidental to it, including 
those due to the negligence of fellow-servants, and 
those he contracts to take, e. g., a miner or a sailor, 
whose occupations of their very nature are danger- 
ous." ai The doctrine was first authoritatively laid 
down in 1842 by Chief Justice Shaw of Massa- 
chusetts, in a famous case. 12 

It is true that, to offset the several defenses 
which the employer had to an action by the work- 
man for injury suffered in the course of his employ- 
ment, the common-law laid certain duties upon the 
employer, breach of which was considered neg- 
ligence or fault on his part. These duties were: 
(1) to employ suitable fellow-servants; (2) to es- 
tablish and promulgate proper rules; (3) to pro- 
vide a safe place to work; (4) to furnish safe ap- 
pliances; (5) to warn youthful and inexperienced 
servants of the dangers of the employment. But 

io Boyd, Workmen's Compensation, p. 5. 

nDawbarn, Employers' Liability and Workmen's Compensation 
(4th Ed), p. 2. 

izFarwell v. Boston, etc., R. Co., 4 Met. (Mass.) 49; see also Boyd, 
Workmen's Compensation, at p. 26. 



UNDERLYING PRINCIPLES 9 

these duties were far from nullifying the special de- 
fenses we have discussed. 13 Thus, though the mas- 
ter was under a duty to employ suitable fellow-serv- 
ants, he discharged himself of all responsibility by 
exercising reasonable care in their selection ; if, after 
such due care, an injury happened to a servant 
through the unfitness or negligence of a fellow- 
servant, the master was not liable therefor. 

It will be seen, then, that the common-law of 
England and the United States rested the em- 
ployers' liability to the workman for injuries to 
the latter in the course of his employment solely 
on principles of tort. The workman could re- 
cover compensation from the employer only when 
he could clearly establish that it was the latter's 
fault that the injury occurred; and the number of 
ways in which such responsibility could be shifted 
I have already indicated. When the accident was 
due to the inherent hazards of the employment, to 
the act of God, or where the blame could not be 
fixed, the employer was not liable. 14 

This review of the state of the common-law in 

i3Burdick, Law of Torts (3d Ed.), pp. 184-197; also Boyd, Work- 
men's Compensation, p. 2. 

i* Boyd, Workmen's Compensation, p. 6. These rules are especially 
unjust in view of modern impersonal relations between employer 
and employed. Commons and Andrews, Principles of Labor Legis- 
lation, pp. 357-358. 



10 WORKMEN'S COMPENSATION AND INSURANCE 

England and America prior to the passage of the 
workmen's compensation acts puts us in a fair way 
to answer one of our questions: "Why was legis- 
lation necessary to engraft the principle of work- 
men's compensation on our law?" Simply because 
the common law and the modern acts proceed on a 
wholly different ethical, economic and legal basis. 
The legislator of to-day rejects the narrow view 
that the problem of industrial accidents is one 
wholly between the parties to the contract of em- 
ployment; and hints that its true solution is to be 
found in saddling on the industry, as one of the 
necessary incidents of conducting it, the expense of 
compensating its injured employees regardless of 
the varying degrees of negligence of the parties. 
Workmen's Compensation presumes a right in the 
injured laborer to compensation for injuries re- 
ceived in the course of his employment; but this 
right is no more personal to the laborer than is the 
duty to pay personal to the employer. In a given 
case, the workman's negligence may be inexcusable, 
the employer's conduct exemplary; but because in 
the long run it is better for the industry to bear 
the brunt of industrial accidents, because indi- 
vidual adjudication of such cases involves great ex- 
pense, delay, and uncertainty, the supporters of 



UNDERLYING PRINCIPLES 11 

the modern legislation have insisted that the law 
shall make "the assumption, in all cases, that neither 
party was guilty of negligence and that the injury 
was the inevitable result of the occupation in which 
the employee was engaged." 15 

The reader must not, however, assume that the 
principle of workmen's compensation, which has 
been thus broadly stated, operates to its fullest ex- 
tent in all those jurisdictions in which it has been 
adopted. Indeed, it has been pointed out that in 
none of the American states in which a modern act 
is in force, does the law cover all employments ; and 
in all there are limitations in the causes and results 
of injuries for which compensation will be 
granted. 16 Most statutes refuse compensation 
when the accident is due to the willful act of the 
employee ; 17 and some make the same rule in the 
case of intoxication. 18 But these and other excep- 
tions must not be taken to impeach the theory on 
which all these acts are based; which is that it is in 

15 Bradbury, Workmen's Compensation and State Insurance Law 
(2d Ed.), p. 6. 

is W. C. Fisher in Quarterly Journal of Economics, vol. XXX, pp. 
22-23. There is a marked tendency, however, to do away with these 
limitations. Rhodes, Workmen's Compensation, p. 135. 

17 Bradbury, Workmen's Compensation and State Insurance Law 
(2d Ed.), pp. 6-7. 

is Bradbury (supra), p. 7; see also New Jersey statute (P. L* 
1911, p. 134) Section 2, paragraph 7. 



12 WORKMEN'S COMPENSATION AND INSURANCE 

the interest of the state and its citizens, to have 
"the portion of the cost of furnishing products and 
services which is represented by the loss of time 
through disabilities caused by accidents arising out 
of the occupation, and by death from such acci- 
dents of persons engaged in the occupation," borne 
in the first instance by the employer and ultimately 
by the consuming public in the form of increased 
prices, rather than by the injured workmen them- 
selves. 19 

As has been shown, the distinction between the 
two legal systems is a fundamental one; the com- 
mon-law of negligence raising the question of com- 
parative fault, while the workmen's compensation 
acts waive that question entirely, and rest on the 
broad proposition that public policy requires that 
the industry bear the burden of the accidents inci- 
dental to it. But, clear as is the distinction in prin- 
ciple, the terms used to describe the two theories 
have been ambiguous and confusing. "Employers' 
Liability" is the antithesis of "Workmen's Com- 
pensation"; and the former should be used to de- 
note the common law system, either in its purity 
or modified in its details but not its principles by 

19 See Dawson, Miles Menander, on The Constitutionality of Work- 
men's Compensation and Compulsory Insurance Laws, in Case and 
Comment, vol 22, at p. 278 (September, 1915). 



UNDERLYING PRINCIPLES 13 

"Employers' Liability laws," as distinct from the 
innovations of the statutes we are discussing. 20 
Notwithstanding, the two terms have not infre- 
quently been used interchangeably. The courts 
themselves have taken notice of these inconsisten- 
cies, however, and in at least one instance have sug- 
gested a change to the more accurate term in de- 
scribing a statute. 

Another phrase which is often used and is apt to 
confuse the unwary is "State Insurance." By 
State Insurance Laws are meant simply those 
workmen's compensation laws, or statutes of even 
broader application, which follow the German plan 
of providing compensation for disabled workers by 
means of state-managed insurance funds, to which 
the employers (and sometimes the workmen them- 
selves) contribute in the form of premiums. This 
is a form of workmen's compensation apparently 
increasing in popularity, though meeting with the 
organized opposition of the private insurance com- 
panies. 21 

Enough has been said to show that a new prophet 

20 Bradbury, Workmen's Compensation and State Insurance Law 
(1st Ed.), at p. ix of the Introduction; Rhodes, Workmen's Compen- 
sation, p 3. See also Gregutis v. Waclark Wire Works, 91 Atl. 
(N. J.) 98, for judicial view of distinction. 

2i See current comment in The Weekly Underwriter, published at 



14 WORKMEN'S COMPENSATION AND INSURANCE 

has arisen in Israel; that the attitude of our fore- 
fathers towards labor, and more especially towards 
the problem of industrial accidents, is not the atti- 
tude of the rising generation. But a theory is not 
sound merely because it is new. How solid is the 
economic basis on which it rests ? 

To begin with, the supporters of the workmen's 
compensation principle insist that accidents are 
an inevitable incident of modern industry. In the 
long run, there will be a "more or less stable aggre- 
gate of loss and damage occasioned by industrial 
accidents ; and this loss or damage is as much a part 
of the cost of the commodity produced as destruc- 
tion of material, wear and tear on machinery, 
etc." 22 In reply to the contention that "the work- 
man can get relief by suing his employer," the ad- 
vocates of the new legislation point to the results 
of actual investigations, like that of the German 
Government commission of 1887, whose careful 
statistics show that out of every 100 serious acci- 
dents 43 are such as no care on the part of the em- 
ployer could have prevented. 23 In those 43 cases, 

80 Maiden Lane, N. Y. The Workmen's Compensation Publicity Bu- 
reau at the same address is avowedly run in the interests of private 
insurance. 

22 Frankel and Dawson, Workingmen's Insurance in Europe, p. 9. 

23 11 Columbia Law Review, p. 40, n. 9. 



UNDERLYING PRINCIPLES 1& 

then, the law of negligence, even under the most 
liberal of employers' liability acts, would give no 
relief; and the burden would be thrown upon those 
least able to bear it — the injured workmen them- 
selves. It need hardly be added that this means, 
in the last analysis, that the support of the disabled 
laborer and his dependents is thrust upon the gen- 
eral community in the form of charity. 24 

Let us put aside for the moment whatever feeling 
of pity for the unfortunate workman and his family 
may be stirred in us by the situation thus presented, 
and consider it simply as an economic problem. In 
a given industry — say that of mining for coal — the 
risk is unusually great. This is not because of neg- 
ligence on the part of the employers, who, we will 
presume, have spent much money and put a great 
deal of thought into safety devices; but because 
mining is an inherently dangerous occupation. 
Every year a great number of serious accidents oc- 
cur; the injured miners, and the representatives of 
those who are killed, are constantly bringing actions 
against the mining companies. Sometimes big ver- 
dicts are recovered; but oftenest it is impossible to 
prove that the employers were negligent, and only 
the lawyers profit. The situation is pitiful; the 

24 Frankel and Dawson, Workingmen's Insurance in Europe, p. 9» 



16 WORKMEN'S COMPENSATION AND INSURANCE 

families of disabled workmen struggle on in dire 
poverty, or drift to the poor-farms, where they are 
a continuous expense to township and county. 

This picture represents more than .a social injus- 
tice; it reveals an economic fallacy. That large 
proportion of accidents which are inseparable from 
the employment, yet for which the law permits no 
recovery against the employer, constitutes one of 
the normal incidents in the production of coal; and 
a sane economic policy dictates the assumption of 
the expense of these accidents, not by the impov- 
erished workman, not by the public charity to 
which the workman eventually turns, but by the 
employers of that industry in the first instance, and 
eventually by the consumer of the coal in the form 
of increased prices for that commodity. It is for 
the consumer of the coal, in the final analysis, that 
the miner toils and subjects himself to danger; and 
since it is the consumer who has set the industry in 
motion, it is but right that when he comes to pay 
for the product of the miner's labor he shall include 
in the purchase-price enough to compensate the 
miner for the dangers he has undergone and the in- 
juries he has suffered. Yet for many years the 
mining communities, instead of the particular group 



UNDERLYING PRINCIPLES 17 

which benefits by the production of the coal, have 
had to bear the burden of the accidents incidental 
to its production, in the form of the expense of 
litigation concerning these accidents, the care of the 
victims, and the many evils growing out of the re- 
sulting distress and pauperism. 25 

Unsound in principle, the old law did not work 
out well in practice. In a few cases, injured work- 
men excited the sympathy of the jury and recovered 
scandalously large verdicts; but a vast majority of 
accidents went wholly uncompensated or were met 
with inadequate payments. 26 It has been esti- 
mated that the common-law remedy furnished com- 
pensation of any kind in not more than 12 per cent, 
of the cases of injuries to employees; and even in 
those few cases of recovery, the amount paid aver- 
aged scarcely one-fifth of what is deemed ade- 
quate. 27 In Germany, before the adoption of the 
compulsory insurance laws, the percentage of cases 
of accidents to employees in which compensation 
was awarded was even smaller, being barely ten 
per cent. 28 That these percentages do not repre- 

25 See Dawson, Miles Menander, in Case and Comment, vol. 22, p. 
278. 

26 Frankel and Dawson, Workingmen's Insurance in Europe, p. 7. 

27 Boyd, Workmen's Compensation, p. 54. 

28 Ibid., p. 74 . 



18 WORKMEN'S COMPENSATION AND INSURANCE 

sent the ratio of meritorious to undeserving cases, 
even approximately, goes without saying. 

Capitalists and large employers to-day have 
joined the labor element in welcoming the compen- 
sation principle. 29 Undoubtedly the aggregate 
yearly payments under the compensation laws are 
greater than formerly under the old slipshod sys- 
tem; but the terror of the "big verdict" is gone. 
Another abomination done away with by the acts is 
the necessity of paying expensive attorneys and 
claim agents to fight the claims — an item often of 
greater magnitude than the whole amount paid as 
damages. 30 

But whether employers are pleased or not, it is 
likely that they will have to submit to workmen's 
compensation laws, which, after long delay, have 
come like a whirlwind upon the United States, most 
of the states and territories having adopted the prin- 
ciple since 191 1. 31 And as the legislation, and the 
industries to which it applies, gradually undergo 
the changes necessary to the process of mutual 
adaptation, even the most stubborn of the oppo- 

29 Senate Document No. 338, 62d Cong., 2d Sess., pp. 551, 1378. 

30 Boyd, Workmen's Compensation, p. 60. 

3i For texts of the laws passed up to the end of 1916, see Honnold, 
Workmen's Compensation, vol. 2. See also digests and other publi- 
cations of the Workmen's Compensation Publicity Bureau, 80 Maiden 
Lane, New York City. 



UNDERLYING PRINCIPLES 19 

nents of the idea will be compelled grudgingly to 
admit, as did a successful and conservative banker 
friend of mine, that "after all, it's a better solution 
of the labor problem than the old one." 



CHAPTER II 

THE RISE OF WORKMEN'S COMPENSATION 

The theory of workmen's compensation is such a 
newcomer to the United States that some study of 
its history, of how, why and where it came to be, is 
essential. To an account of the rise of the compen- 
sation principle, and a description of the form it has 
taken in foreign countries, and more especially in 
Germany and England, this chapter is devoted. 

Switzerland was the first country to declare that 
for accidents in certain employments the employer 
was to be liable without proof of fault ; 1 but the 
German Industrial Insurance Act of 1884 is con- 
ceded to have been the first modern compensation 
law, 2 and on the German system most subsequent 

ill Columbia Law Review, p. 36. See also Fourth Special Report 
of the Commissioner of Labor, edited by John Graham Brooks 
(1893), p. 354; and Frankel and Dawson, Workingmen's Insurance 
in Europe, p. 74. The Swiss law of 1881 "made factory proprietors 
liable without fault for accidental injuries to their employees," 
and included among such injuries "diseases caused by such poisonous 
substances as should be specified by the Federal Council." 65 Univ. 
of Penn. Law Review, 516-517 (April, 1917). 

2 Bradbury, Workmen's Compensation and State Insurance Law 
(1st Ed., 1912), p. xii of Introduction. 



THE RISE OF WORKMEN'S COMPENSATION 21 

enactments have in some degree been patterned. 3 
It must not be supposed, however, that in Germany 
or anywhere else the compensation principle came 
into being by spontaneous generation; its ultimate 
adoption was the culmination of a long series of 
legislative experiments along similar lines, which in 
turn were the result of gradual advances in the field 
of eccjpomic philosophy. 

The philosophic influences which have molded 
modern German labor legislation are especially im- 
portant. They are very much older than such 
legislation itself, going back at least to Hegel, 
Fichte and Sismondi, whose theories were the in- 
spiration respectively of Marx, Lasalle and Winkel- 
blech, the three Socialistic thinkers with whom the 
rise of the principle of compulsory workmen's in- 
surance is indissolubly associated. The theory of 
the duty of the state towards the working class, 
which Fichte, writing at the close of the eighteenth 
century, expounded with such eloquence, was taken 
up and expanded by Sismondi twenty years later; 
and it was the latter's disciple, Professor Winkel- 
blech (Karlo Mario), who first conceived the idea 
of state insurance in Germany. Another Socialist, 
Dr. Schaeffle, has been called the father of that 

3 11 Columbia Law Review, p. 37. 



22 WORKMEN'S COMPENSATION AND INSURANCE 

principle ; and it was unquestionably the sudden in- 
crease in the Socialistic vote after the Franco-Prus- 
sian War that led Bismarck to adopt the compul- 
sory insurance idea. 4 

The Prussian Act of November 3, 1838, had con- 
tained the elements of an employers' liability law of 
narrow application. It provided, in substance, that 
railway companies should be liable to both em- 
ployees and passengers for injuries sustained from 
the operation of the trains ; but it also expressly per- 
mitted the companies to set up in defense either 
that the accident had been caused by the negligence 
of the injured party, or that it was due to an act of 
God. 5 The statute was indicative of a broader 
attitude towards accidents to employees than that 
characteristic of the common law of negligence and 
fault; but there was as yet no sign of acceptance 
of the compensation principle. 

Labor problems, however, continued to occupy 
the attention of German legislators. In 1854, cer- 
tain classes of employers in Prussia were compelled 

4 Fourth Special Report (see footnote 1), pp. 19-22, 27. Mr. 
Brooks, the author of the report, makes, in Chapter 1, a thorough 
examination into the philosophic basis of the compensation principle. 
See also Rhodes, Workmen's Compensation, pp. 41-45. 

6 Boyd, Workmen's Compensation, p. 26. Mr. Boyd has an excel- 
lent historical summary of German legislation in this book, on which 
the writer has freely drawn for information. 



THE RISE OF WORKMEN'S COMPENSATION 23 

by statute to contribute one-half of the subscrip- 
tions to the fund of the sick associations formed 
according to local statutes; and Brunswick, Meck- 
lenburg and Saxony went even further in requiring 
that all employers should be members of some kind 
of mutual sick association. 6 The earlier Prussian 
laws, however, do not seem to have been very effec- 
tive; as, in 1876, when the law relating to friendly 
and active societies was passed, barely one-half of 
those employed in mines and other industries com- 
ing within the law were insured in the Sickness, 
Relief and Burial Societies provided for. 7 

The employers' liability act of 1871, for united 
Germany, related only to mines, railways, and a 
few other industries, and made employers liable 
for death or accident proved to be directly or in- 
directly the fault of the employer. Assumption of 
risk and the fellow-servant rules were done away 
with by this statute, which, however, caused so much 
bitterness and involved so many delays in the ad- 
ministration of justice that it must be set down as a 
failure. 8 

The voluntary insurance act of 1876, to which I 

« Fourth Special Report (supra), p. 35; Boyd (supra), pp. 26-27. 
See also Willoughby, Workingmen's Insurance, pp. 33-34. 
7 Boyd, Workmen's Compensation, p. 27. 
s Ibid., pp. 28, 1180-1181. 



24 WORKMEN'S COMPENSATION AND INSURANCE 

have already referred, also proved a failure, as a 
result of that industrial selfishness which is the hane 
of all such legislation. 9 The need of stronger 
measures, which in operation would not lay the hur- 
den on conscientious employers and exempt their 
less altruistic competitors, was pressing; and Bis- 
marck set himself to the solution of this problem 
with characteristic energy. The compulsory in- 
surance acts of 1883-1889, heralded by an Imperial 
message to the Reichstag on November 17, 1881, 
were the results of his labors. 

The scheme of these laws was novel and compre- 
hensive. By the Sick Insurance Act of June 15, 
1883, insurance was made compulsory as to work- 
men of an earning capacity up to 2,000 marks a year 
in a large class of industries, and voluntary as to the 
exempted workmen, officials and servants. It was 
to be carried out by means of local associations, es- 
tablished by trade guilds, townships, factories, or 
other industrial units; these were mutual, self -ad- 
ministered organizations, to whose insurance funds 
workmen and employers contributed in a ratio of 
two to one. The relief to which the insured were 
entitled consisted in free medical attendance from 
the beginning of the illness, including medicines, 

9 Fourth Special Report (supra), p. 46. 



THE RISE OF WORKMEN'S COMPENSATION 25 

bandages, etc., and a sick pay equal to one-half of 
the insured's wages for a limited period, first set 
at 13 weeks. In addition, special hospital treat- 
ment was provided for in particular cases, and 
burial money in the case of death. 10 

Accident Insurance (as distinguished from Sick 
Insurance) was covered by the following enact- 
ments: (1) the "fundamental law," often re- 
ferred to as the first modern compensation act, of 
July 6, 1884, which applied to mines, quarries, ex- 
cavations, factories, and in general the handicrafts 
using machines and some underground building; 
(2) the "extension law," extending the principle 
of the former act to the transport trades within the 
country, including the post, telegraph, army and 
navy; (3) the "agricultural law" of May 5, 1886, 
for Agriculture and Forestry; (4) the "building 
law" of July 11, 1887, for building trades so far 
not insured; (5) the Marine Law of July 13, 1887> 
for Navigation. 

It will be seen that the general plan of this legis- 
lation was to provide a special set of rules adapted 
to each particular province of insurance. As re- 
vised in 1900, it consisted of four separate laws, 

io Boyd, Workmen's Compensation, pp. 1175-1180; Willoughby a 
Workingmen's Insurance, p. 41. 



26 WORKMEN'S COMPENSATION AND INSURANCE 

relating to (1) Industry; (2f) Agriculture and For- 
estry; (3) Building; (4) Navigation. The scheme 
is carried out, much as in the case of the sickness 
insurance, "under the guarantee of the Empire, on 
the mutual system, by the employers united in 
trade associations, which may embrace all the sev- 
eral branches of industry in certain districts or in 
the whole empire." 11 The provisions of the law 
relating to Industry are of primary interest in our 
study, and will first be briefly considered. 

The Act is made applicable to employers and 
officials whose incomes are not above 2,000 marks 
per annum, as well as to workers in mines, quarries, 
factories, etc.; and a number of other classes may 
be included by the peculiar law of the particular 
German state or may voluntarily join the insur- 
ance. Workmen and employers contribute to the 
fund, which is used for the payment of compensa- 
tion as in the case of the Sickness insurance. 

From the beginning of the fourteenth week after 
the occurrence of an accident incurred in the course 
of the employment (when the sickness insurance 
would expire) the injured workman, if totally dis- 
abled, is given free medical attendance and a pen- 
sion equal to two-thirds of his yearly earnings; if 

ii Boyd (supra), pp. 1182-1183. 



THE RISE OF WORKMEN'S COMPENSATION 27 

only partially disabled, the pension is only par- 
tial. 12 Burial money and a pension for the family 
in the case of death are also provided for; and the 
normal payments mentioned above are likely to be 
increased to a full pension or given in a lump sum 
if the total disability takes the form of absolute 
helplessness, or the injury was caused intentionally 
by the employer. 13 

Some other points of the plan are worthy of 
notice. For example, during the first thirteen 
weeks of disability, known as the waiting period, 
the employer was liable for the injured man's sup- 
port in case the sick associations failed to provide 
for him ; though this has now been altered. 14 From 
the decision of the trade association on the validity 
of a claim under the act, there was an appeal, orig- 
inally to the imperial bureau, and, after 1901, to a 
special arbitration court. 15 And since the trade 
associations have a decided interest in diminishing 
the number of accidents, the law confers on them 
the important privilege of prescribing safety regu- 

12 Fourth Special Report (supra), pp. 90-91; Willoughby (supra) s 
p. 60; Dawson, Social Insurance in Germany, p. 113. 

13 Boyd (supra), pp. 1184-1185; Willoughby (supra), p. 60. 
"Boyd (supra), p. 1185. 

ib Ibid. Mr. Brooks, in the Fourth Special Report (supra), writ- 
ing in 1893, says that one-sixth of the decisions of the trade asso- 
ciations were appealed to the imperial bureau (at p. 93). 



28 WORKMEN'S COMPENSATION AND INSURANCE 

lations, infringements of which they may punish by 
higher assessments on employers or fines on work- 
men. 16 

The Agricultural Insurance Law, which applies 
to Forestry as well, differs somewhat from the In- 
dustrial Insurance Law in its methods of operation. 
The agricultural trade associations are organized 
by territorial districts, made to coincide with com- 
munal or provincial boundaries. These bodies, at 
their assemblies, levy contributions for the insur- 
ance fund, on the basis of taxes; and the compen- 
sation paid, except in the cases of skilled workmen 
or managing officials, is based on the average rate 
of wage for agricultural laborers, rather than actual 
earning power. Furthermore, during the "wait- 
ing-time," the parish, instead of the employer, is 
required to make preliminary provision for the in- 
jured laborer. 

Under the Building Trades Accident Insurance 
Law and the Marine Accident Insurance Law the 
compensation is administered by "insurance insti- 
tutions" established as appendages to the several 
associations. In the case of small marine enter- 
prises, a special "Insurance Institution" is provided, 
to which masters of small craft employing regu- 

16 Fourth Special Report (supra), p. 95. 



THE RISE OF WORKMEN'S COMPENSATION 29 

larly not more than two wage- workers are subject; 
the compensations being raised by premiums and 
contributed to by the larger parish unions. 17 

Another form of state insurance provided for in 
Germany, and important in this connection because 
it forms one of the chief branches of the consolidat- 
ing act of 1911, is Invalidity and Old Age Insur- 
ance. It was first established by a statute approved 
on June 22, 1889, 18 and was replaced ten years 
later, after about eight and one-half years of actual 
operation, by the act of July 13, 1899. Persons 
working for wages in any branch of trade, manag- 
ing officials such as foremen and engineers, clerks, 
apprentices, teachers and tutors, and some other 
employees, are compelled to insure; masters em- 
ploying only one or two workmen, employees with 
yearly earnings in excess of 2,000 marks and less 
than 3,000, and those who work only occasionally 
or for maintenance, are allowed to join the insur- 
ance voluntarily. The object of the law is to give 
the insured a legal claim to a pension for invalidity 
or old age. Its benefits may be invoked by every 
insured person who is permanently disabled, irre- 

17 Boyd, Workmen's Compensation, p. 1193. 

is Fourth Special Report (supra), p. 116; Willoughby (supra), 
p. 36; Dawson, Social Insurance in Germany, p. 19. 



30 WORKMEN'S COMPENSATION AND INSURANCE 

spective of age ; and without proof of disability by 
insured persons who have completed their seven- 
tieth year. Contributions to the fund are furnished 
by the Empire, the employers and the employed, 
jointly. Pensions are administered by special In- 
surance Institutions, which are corporations whose 
responsibility is guaranteed by the state. 19 The 
amounts are considerably smaller than the compen- 
sation provided for by the accident insurance laws, 
but there is a good explanation of this in the fact 
that gradual decline in bodily vigor is an inevitable 
occurrence against which every prudent man is 
bound to provide, while sudden industrial accidents 
upset all calculations. 20 

The three great branches of state insurance which 
we have described — Sickness, Accident, and In- 
validity — were consolidated into the German 
Workmen's Insurance Code by the act of July 19, 
1911. This statute is essentially a codification, and 
carries out the scheme of the individual acts even 
to the retention of separate administrative bodies 
to conduct the three branches. "Survivors' Insur- 
ance" to protect widows and orphans is a new fea- 
ture; so is the introduction of a series of govern- 
ment offices to supervise the insurance organ- 

i» Boyd (supra), p. 1200. 20 ibid., p. 



THE RISE OF WORKMEN'S COMPENSATION 31 

izations; but in the main the changes have been in 
the nature of a harmonizing and extension of the 
provisions of the former acts rather than the in- 
troduction of new matter. The act represents the 
existing law in the Empire on the subject; and it 
may be mentioned, as characteristic of German 
thoroughness and genius for detail, that a trans- 
lation of its provisions fills nearly 300 pages of fine 
print in a generous American law-book. 21 

The German Compulsory State Insurance Law 
has been called "the boldest experiment in social 
legislation ever attempted." It represents the 
most complete development yet attained along the 
line of Workingmen's Insurance, and has served as 
a model for legislation in several American states. 
In the writer's opinion, it comes nearer to the ideal 
law than any in force elsewhere. But state insur- 
ance is too near state socialism to meet with uni- 

21 Pages 1227-1500 in Mr. Boyd's treatise. An excellent review of 
the statistics available just before the outbreak of the Great War, 
with deductions therefrom as to the desirability of the German sys- 
tem, is to be found in The Market World and Chronicle, vol. 93, 
pp. 814-819 (June 27, 1914). The author of the article comes to 
the conclusion that German Industrial Insurance is not actuarially 
solvent owing to insufficient provision for reserves; and also com- 
ments on the "pension hysteria" resulting from the too liberal awards 
made prior to 1908. Neither of these criticisms, in the opinion of the 
present writer, condemns the state insurance project, though indi- 
cating possible improvements in details. 



32 WORKMEN'S COMPENSATION AND INSURANCE 

versal acceptance. Though it cannot but be recog- 
nized that the principle of workmen's compensation 
— of liability of the employer for injuries to the 
employee without regard to comparative negligence 
— can only be made thoroughly practical in opera- 
tion by the use of some system of insurance, many 
commonwealths have preferred to leave this prob- 
lem to be worked out by voluntary associations. 
Compensation laws in these jurisdictions affirm the 
principle of the right of the injured workman to 
some indemnity from the employer, prescribe the 
amounts to be paid and the method of administra- 
tion, but are silent as to how employers and work- 
men shall contrive that the compensation shall al- 
ways be forthcoming without undue shock to the 
financial stability of the industry. The typical 
statute of this nature, and one which, like the Ger- 
man law, has served as a model for many American 
acts, is that now in operation in England. 

In England, as in Germany, the development of 
the workmen's compensation principle was grad- 
ual. The fellow-servant rule, though well estab- 
lished after Priestley v. Fowler, 22 had not been 
popularly supposed to extend to cases where the 
fellow-workman was of a higher rank and prac- 

223 M. & W. 1 (1837). 



THE RISE OF WORKMEN'S COMPENSATION 33 

tically acting in the place of the master. But in 
Wilson v. Merry, in 1868, the House of Lords 
pushed the doctrine to its utmost limits. In that 
case the plaintiff's son, a miner, was killed by an 
explosion of fire-damp which had accumulated ow- 
ing to defects in a staging which had been erected 
by the defendant's superintendent, a competent 
man. In holding that the plaintiff could not re- 
cover, Lord Cranworth said: "Workmen do not 
cease to be fellow- workmen because they are not all 
equal in point of station or authority." 23 

After this case, the imperative necessity of some 
statutory modification of the common-law became 
apparent. A rule so narrow would prevent re- 
covery in most cases of servants of corporations, 
since the negligence would almost of necessity be 
that of another servant of the corporate entity. 
And it was really to undo the mischief caused 
by the sweeping language used in Wilson v. Merry 
that the Employers' Liability Act of 1880 was 
passed. 24 

The Act of 1880, like the subsequent broader 
statute of 1897, was the work of Joseph Chamber- 

23 L. R. 1 H. L. (Scotch) 326 (1868). At p. 334. 

24 Dawbarn, Employers' Liability and Workmen's Compensation 
(4th Ed.), p. 5. 



34 WORKMEN'S COMPENSATION AND INSURANCE 

lain. 25 Framed, as it was, with an eye to securing 
the political support of both manufacturers and 
workmen, it is in no sense a radical measure. It 
creates no new cause of action, but leaves the work- 
man to sue for damages as before ; and in such a suit 
the employer is permitted to set up the same de- 
fenses as at common-law, except that the accident 
was due to the negligence of a fellow-servant. This 
abolition of the "defense of common employment," 
or (as we have termed it) the fellow-servant rule, 
is the one outstanding feature of the whole piece of 
legislation. 26 

The Employers' Liability Act unquestionably 
brought about an improvement in the labor sit- 
uation in England. But it had the inherent weak- 
nesses of a measure of narrow application. To be- 
gin with, it covered only a limited range of 
employments, and these were arbitrarily selected. 
Against purely collateral negligence of a workman 
in the same grade of employment, it did not pro- 

25 For the source of this and other historical data with regard to 
the development of the Workmen's Compensation principle in Eng- 
land, see the comprehensive work of Mr. Dawbarn (supra), and an 
excellent article by J. G. Pease in 15 Columbia Law Review 509- 
523 (June, 1915) entitled "An English Workman's Remedies for 
Injuries Received in the Course of His Employment, at Common-law 
and by Statute." 

2«Tillyard, Industrial Law, p. 104. 



THE RISE OF WORKMEN'S COMPENSATION" 35 

tect. And the causes of injury to which the Act 
applied were specified with too great precision; a 
workman with a meritorious cause of action was apt 
to fail through mere inability to bring himself 
within the strict provisions of the act. 27 These de- 
fects, and the growing popular demand for some 
simple scheme by which the workman's claims could 
be settled without resort to prolonged and expensive 
litigation, led to the government's definitely com- 
mitting itself to workmen's compensation in 1897. 

The new law bound employers in a wide range 
of industries to pay to such of their workmen as 
should be injured by an accident arising out of and 
in the course of the employment, compensation 
upon a scale fixed by the act. Disputes as to the 
amount of compensation payable were to be sub- 
mitted to arbitration, with a right of appeal to the 
higher courts. The language of the act was simple 
and direct; but that very unlawyer-like simplicity 
was the cause of much confusion, and the reports 
are full of cases in which the legal significance of 
apparently lucid phrases is discussed at length. 28 

Several amending acts followed the passage of 
the Act of 1897, and finally, in 1906, it was re- 

27 Pease (see footnote 25), pp. 514-515. 

28 Pease (supra), p. 516. 



36 WORKMEN'S COMPENSATION AND INSURANCE 

pealed, and its main provisions reenacted with va- 
rious amendments extending its benefits to classes 
of workmen not covered by the preceding statutes. 
It will be well worth while to consider briefly the 
main provisions of this act of 1906, which has been 
so widely discussed and so frequently copied. 

To begin with, the Act makes the right to com- 
pensation a statutory incident of the contract of 
service ; in a sense, it puts the master in the position 
of an insurer against accident, though payment of 
premiums and other indicia of insurance are lack- 
ing. The master's negligence is wholly imma- 
terial. 29 

For practical purposes, the statute is divided into 
three parts : ( 1 ) the Act itself, which deals mainly 
with the question of liability for compensation ; ( 2 ) 
Schedule I, which prescribes how the compensation 
is to be assessed and disposed of; and (3) Schedule 
II, dealing with the procedure to be adopted. 30 
The first of these topics is of infinitely the greatest 
importance for the purposes of our study. 

A very wide range of employments is covered by 
the Act. Any person who has entered into or 
works under a contract of service or apprentice- 

29 Pease (supra), p. 517. 
30Dawbarn (supra), pp. 85-86. 



THE RISE OF WORKMEN'S COMPENSATION 3T 

ship, express or implied, either by way of manual 
labor, or any sort of labor attended with a remuner- 
ation of less than £250 a year, is entitled to claim 
its benefits; save that a few groups, such as the 
police, some casual workers, and workers who hap- 
pen to be members of the employer's family, are 
excluded from its operation. 31 Compensation, nor- 
mally in the form of a weekly sum during the pe- 
riod of total or partial incapacity, is required to be 
paid whenever "personal injury" by accident aris- 
ing out of and in the course of the employment is 
caused to a workman. 32 In the case of death from 
such an accident, the workman's dependents are en- 
titled to a sum proportioned to his earnings, but not 
in excess of £300. 33 

The master's liability to pay compensation under 
the Act of 1906 arises whenever the claimant, a 
"workman" within the meaning of the Act, has suf- 
fered injury "by accident arising out of and in the 
course of" his employment. Clearly, then, the in- 
jury, to be one under this statute, must : ( 1 ) be by 
an accident; (2) arise out of the employment; (3) 

3i Pease (supra) ; also Boyd, Workmen's Compensation, p. 1131. 
"Workman" is denned by Section XIII of the Act, which limits the 
word as indicated above; special limitations on the application of 
the Act are also to be found in Sections VII and IX. 

32 Section I, subdivision 1 of the Act of 1906 (6 Ed. 7, ch. 58). 

33 Pease (supra), p. 516. 



38 WORKMEN'S COMPENSATION AND INSURANCE 

arise in the course of the employment. And if any- 
one of these tests is not met, the claimant fails to 
establish his right to compensation. These phrases 
were the subject of much argument and speculation 
in the infancy of the act, but their meaning is now 
pretty definitely settled. 84 

The word ''accident" has been construed with 
great liberality by the English courts. The defi- 
nition most generally accepted is that of Lord 
Macnaghten in Fenton v. Thorley & Company* 
Ltd., 35 to the effect that "accident" is used (in the 
act of 1897) "in the ordinary and popular sense 
of the word as denoting an unlooked-for mishap or 
an untoward event which is not expected or de- 
signed." It follows that mishaps caused by the 
negligence of the injured man, as well as those for 
which no one can be held responsible, may consti- 
tute injury by accident; and so it was held in the 
Thorley case. Even where the injury is designedly 
caused by some person other than the injured man, 
it is an accident as to the victim, who neither de- 
signed nor expected it; and such was the opinion 
of the House of Lords in the case of Trim Joint 
District School v. Kelly, 36 where the death of a 

34 Pease (supra), p. 517. 

35 (1903) Appeals Cases 443, at p. 448. 

36 (1914) A. C. 667. 



THE RISE OF WORKMEN'S COMPENSATION 39 

schoolmaster caused by deliberate and intentional 
violence on the part of his pupils was held an "acci- 
dent." But an accident must be something fortui- 
tous, some mishap occurring at a definite time and 
place; so injuries to the health resulting from ordi- 
nary wear and tear of work, or a gradual under- 
mining of the constitution due to the nature of a 
man's occupation, do not come w T ithin the category 
of accident. 37 

The Act of 1906, however, is not confined to the 
field of "accidental injury" as that phrase has been 
interpreted by the courts. Section VIII extends 
its benefits to cases of death or disablement by cer- 
tain specified industrial diseases, to which workers 
in particular processes are peculiarly liable. In the 
Schedule attached to the Act these industrial dis- 
eases are specified as anthrax, lead, mercury, phos- 
phorus and arsenic poisoning and their sequelae, and 
ankylostomiasis ; but the power given by subsection 
(c) to the Secretary of State to extend this list 
has been repeatedly exercised. 38 The arbitrary 
specification of these diseases as "accidental" causes 
of injury does not prevent a claimant suffering 
from a disease not specified from suing on the 

37 Pease (supra), p. 518. 

ss Dawbarn (supra), pp. 225-259; 65 Univ. of Penn. Law Review, 
525-526 (April, 1917). 



40 WORKMEN'S COMPENSATION AND INSURANCE 

theory that his injury was in fact due to the ''acci- 
dent" of his having been subjected to infection by 
that particular disease, as was successfully done be- 
fore the passage of the section in the case of anthrax 
and some other diseases. 39 

"Arising out of and in the course of the employ- 
ment" has also been given a very liberal construc- 
tion by the British courts. As has been pointed out 
by a keen observer, the first half of the phrase ex- 
presses the only essential element. A just concep- 
tion of the underlying principles of workmen's com- 
pensation requires that the employer be held liable 
only for the results of accidents arising "out of" 
the employment; but there is no reason why com- 
pensation should be restricted to cases of injury 
sustained strictly "in the course of" the same. 40 As 
a result, this part of the phrase has been practically 
nullified by the broad construction put upon it by 
the English courts. Thus, the "course of the em- 
ployment" has been construed to include riding to 
and from work in the master's conveyance, 41 or in 
a public conveyance by understanding with him, 



42 



39Higgins v. Campbell & Harrison (1904), 1 K. B. 328. 

40 30 Quarterly Journal of Economics, p. 30. 

4i Mole v. Wadsworth, 6 Butterworth's Workmen's Compensation 
Cases 129. 

42 Holmes v. Great Northern By. Co., 2 Workmen's Compensation 
Cases 19. 



THE RISE OF WORKMEN'S COMPENSATION 41 

waiting at the station for a train, 43 eating noon 
luncheon on the employer's premises, 44 going for 
pay even outside of regular working hours, 45 even 
going for a Sunday visit to one's wife, 46 and in one 
remarkable case going to a public-house for a glass 
of beer. 47 In short, a man has been held to be in 
the course of his employment "not only while he is 
actually at work, but while he is at any place where 
he was required to be by the terms of his employ- 
ment, before or after his actual working time and 
during cessation of work for a necessary purpose, 
or even in legitimate intervals of leisure." 4S And 
he may still be acting "in the course of" his employ- 
ment if, in an emergency, he goes outside his proper 
work, and to protect his master's interest does some- 
thing wholly without the scope of that employ- 
ment. 

Whether an accident arises "out of" the employ- 
ment, however, may be a perplexing and is always 
an important question. The essence of the re- 
striction is that the accident must have some rela- 
tion to the employment. But its application is at- 

43 Cremins v. Guest, 1 B. W. C. C. 160, 1 K. B. 469. 

44 Blovelt v. Sawyer, 6 W. C. C. 16. 

45 Lowry v. Sheffield Coal Co., 1 B. W. C. C. I. 

46 Richardson v. Morris, 7 B. W. C. C. 130. 

47 Martin v. Lovibond & Sons, 7 B. W. C. C. 243, 

48 Pease (supra), p. 519. 



42 ' WORKMEN'S COMPENSATION AND INSURANCE 

tended with considerable difficulty. Where the 
accident is caused directly by what the workman is 
employed to do, by the condition of the machinery 
or premises, the situation is clear enough; but 
where some outside agency, such as an assault, sun- 
stroke, lightning, the negligence of a party not con- 
nected with the employment, brings about the in- 
jury, the courts are often much puzzled. "The 
proper test to apply in these cases," says Mr. J. G. 
Pease in a recent article, "is whether the nature of 
the employment or the place where it is carried on 
involves more than ordinary risk of accidents of this 
kind." 49 

Accordingly, it was held that where a cashier was 
murdered by robbers, his death was due to a risk 
arising out of the employment, since the generally 
known fact that he carried large sums about him 
involved him in more than ordinary risk of attack. 50 
So, where a workman stationed on a high scaffold- 
ing was struck by lightning, a recovery was per- 
mitted on the ground that the nature of his employ- 
ment exposed him to more than ordinary danger 
from the elements. 51 And a foreman of a furni- 

49 Ibid., p. 520. 

soNisbet v. Rayne & Burn (1910), 2 K. B. 689. 
5i Andrew v. Falesworth Industrial Society, Ltd. (1904), 2 K. B. 
32. 



THE RISE OF WORKMEN'S COMPENSATION 43 

ture-moving concern who was assaulted by a man 
who wished to hire a van and was told they were all 
out, was held to have suffered an injury "arising 
out of and in the course of" his employment. 52 

But where an engine-driver left his engine and 
crossed a siding for his own purposes, and on the 
return was killed by a wagon being shunted, the 
accident did not arise "out of and in the course of" 
his employment, according to an interesting case. 53 
Again, a mine-collier left his special stall to ascer- 
tain the time, and was killed by a fall of the roof on 
his way back ; the court found here that he had not 
gone to see the time in the interests of his employers, 
and so the injury did not arise "out of" the employ- 
ment. 54 Nor can an assault by fellow-workmen in- 
duced by mere personal animosity be said to arise 
out of the employment, and it was so held. 55 

The extremely liberal construction of the courts 
has, as we have seen, made possible a recovery of 
compensation by the injured employee in a large 
proportion of cases. But the Act has left to the 
master the defense that the accident resulted from 

B2Weekes v. Stead & Co. (1914), 7 B. W. C. C. 398. 

53 Reed v. Gt. Western Ry., Stone's Insurance Cases, no. 2058, 
(1909) A. C. 31. 

5* Warren v. Headley's Colliery Co., Stone's Insurance Cases, no. 
2065. 

es Fitzgerald v. Clarke & Son (1908), 2 K. B. 32. 



44 WORKMEN'S COMPENSATION AND INSURANCE 

the "serious and willful misconduct" of the work- 
man. 56 Unnecessary and deliberate disobedience 
of orders is usually held to be within this provi- 
sion, 57 the judicial interpretation of which has been 
exceedingly fair and reasonable. Such an act as 
that of a boy in running in front of an express train 
out of pure bravado, 57 a or of a miner in deliberately 
walking along a main haulage road on which a train 
of coal trams was in motion, instead of taking 
refuge in a manhole, 58 will defeat recovery under 
the Act ; but mere disobedience of a trifling regula- 
tion is not "unnecessary and deliberate" so as to 
constitute serious and willful misconduct. 59 

Possible complications arising out of the practice 
of sub-contracting are provided against by Section 
IV of the Act. A workman is entitled always to be 
compensated by his own master ; but in cases where 
a third party as principal has contracted with that 
master to have the latter perform the whole or part 
of work undertaken by the principal, and injuries 
to the workman occur during the prosecution of 
such work in the course of and for the purpose of the 

56 Section I, paragraph 2. 
57Dawbarn (supra), p. 142. 
57a Ibid. 

58 John v. Albion Coal Co., 18 T. L. R. 27 (1901Y. 

59 Johnson v. Marshall, (1906) A. C. 409; M' William v. Ry. Co., 7 
B. W. C. C. 875. 



THE RISE OF WORKMEN'S COMPENSATION 45 

principal's trade or business, happening on or in or 
about the premises where he had undertaken to ex- 
ecute the work, or which were otherwise under his 
control or management — in these cases, the work- 
man is entitled to recover against the principal. A 
man is not liable when in his private life, or for any- 
thing apart from his trade or business, he contracts 
with another to have work done for himself; his 
responsibility is limited to the instances enumerated. 
It is, of course, in cases where his immediate em- 
ployer, the sub-contractor, is financially weak, that 
the workman will most often elect to claim compen- 
sation from the principal. 60 

A final point to be noted in connection with the 
Act of 1906 is the choice of remedies which a work- 
man under some circumstances has. The Em- 
ployers' Liability Act of 1880 was not repealed by 
either of the subsequent more radical measures; so 
if a factory laborer to-day is injured by reason of a 
defect in the condition of the plant or machinery due 
to the personal negligence of the employer, he may 
(1) bring an action at common-law; (2) sue under 
the Employers' Liability Act; or (3) apply for 
compensation under the Workmen's Compensation 
Act. By taking the last course, he avoids the dan- 

eoDawbarn (supra), pp. 174-185. 



46 WORKMEN'S COMPENSATION AND INSURANCE 

ger of being met by common-law defenses; but as 
the Act limits the compensation according to arbi- 
trary schedules, he may recover less than might be 
awarded by a jury, which can take personal suffer- 
ing, medical expenses, etc., into consideration. On 
the other hand, if the workman is permanently in- 
capacitated, the weekly stipend he could claim un- 
der the Act might be more desirable than the lump 
sum a jury would award. There can be no double 
recovery, of both damages and compensation. 

Though in the National Insurance Act of 1911, 
which contains provisions for Health Insurance, 
Unemployed Insurance, and general outdoor re- 
lief, 61 England has adopted some of the features of 
the comprehensive German scheme, she stands com- 
mitted, so far, to the more familiar form of Work- 
men's Compensation as the answer to the problem 
of industrial accidents. This is natural in a coun- 
try of conservative traditions ; the abandonment 
of the common-law criteria of negligence was a 
great concession, and it was not to be expected that 
the British mind would regard with favor what has 
frequently been characterized as a leap into the 
dark. What workingmen's insurance there is in 

si Boyd, Workmen's Compensation, p. 1172. 



THE RISE OF WORKMEN'S COMPENSATION 47 

England — and it is by no means inconsiderable — 
is carried on by private companies and mutual 
"friendly societies" which are very jealous of gov- 
ernmental interference. 62 

As the English and German acts are typical of 
the two most prevalent legislative methods of 
coping with the problem of injuries to workmen, 
and as they are the prototypes, in whole or in part, 
of most of the workmen's compensation laws of 
this country, we will dispose of the systems of other 
European nations rather summarily. In Austria, 
the German plan of compulsory insurance has been 
taken over almost bodily. 63 In France, a compro- 
mise measure 64 was enacted in 1898, which makes 
the employer absolutely liable, as in England, but 
provides for a system of voluntary insurance. Nor- 
way has a compulsory accident insurance law dating 
from 1894 ; 65 Sweden and Denmark, workmen's 

62 Frankel & Dawson, Workingmen's Insurance in Europe, p. 44 ; 
also Willoughby, Workingmen's Insurance, p. 233. The first em- 
ployers' liability insurance company was founded in 1881 in England, 
in response to a demand for protection against the heavy liabilities 
imposed by the act of 1880. Economic World, vol. 99, p. 310 (March 
3, 1917). 

es Frankel & Dawson (supra), p. 115 et seq.; Willoughby (supra), 
p. 88. 

64 Frankel & Dawson (supra), p. 64 et seq. 

65 Bulletin No. 126, U. S. Bureau of Labor Statistics, pp. 132, 135, 
163; Frankel & Dawson (supra), p. 48. 



48 WORKMEN'S COMPENSATION AND INSURANCE 

compensation acts of the English type. 66 Belgium 
holds employers liable for accidental injuries to 
employees, unless the former insure in companies 
approved by the state. 67 Holland has gone the 
whole way in compelling employers to insure, 
though not necessarily in the state fund provided. 68 
In Italy, a compulsory insurance law was adopted 
in 1898; but, like the Dutch act, it allows employers 
considerable latitude with respect to the sort of in- 
surance carried. 69 The compensation principle has 
also been adopted in some form in Finland (1895), 
Spain (1900), Greece (1901), Luxembourg 
(1902), Russia (1903), Hungary (1907), Bulgaria 
(1908), Liechtenstein (1910), Serbia (1910), 
Montenegro (1911), Switzerland (1912), Portu- 
gal (1913), and some other European states. 70 

Outside of Europe, workmen's compensation has 
taken a decided hold on the scattered members of 
the British empire. In New Zealand, the Trans- 
vaal, Cape of Good Hope, at least four of the Aus- 

seFrankel & Dawson (supra), pp. 51, 54-57; Bulletin No. 126 
(supra), p. 163. 
«7Frankel & Dawson (supra), pp. 61-62. 
es Ibid., p. 58. 

69 Ibid., pp. 81-89. 

70 Bulletin No. 90, U. S. Bureau of Labor (September, 1910), pp. 
723-748; Prof. Wambaugh's article in 25 Harvard Law Review 129 
(December, 1911), refers to the above, at p. 132, note 3; see also 
Frankel & Dawson, Workingmen's Insurance in Europe, p. 19. 



THE RISE OF WORKMEN'S COMPENSATION 49 

tralian provinces, and in Newfoundland, British 
Columbia, Manitoba, Nova Scotia, Alberta, Quebec 
and Ontario, acts chiefly patterned on the English 
law are in force; while Japan, Peru, Mexico and 
Venezuela have instituted the system. 71 Yet so 
slow were the American states in accepting the 
theory that, after the passage of the Quebec act of 
1909, a Canadian writer found it necessary to go 
back to first principles in explaining it to the read- 
ers of an American law review. 72 

Yet dissatisfaction with the workings of the com- 
mon-law of negligence in the United States has 
long been widespread. More than sixty years ago, 
the Georgia legislature passed an act modifying the 
fellow-servant rule in its application to railways ; 73 
and similar statutes, in one case taking the extreme 
form of abolition of the rule, 74 have been adopted in 
other states. The Federal government, which had 
long denied its injured employees any redress save 
what could be procured through the uncertain me- 
dium of the Court of Claims and special bills, made 
provision for compensation in the case of injury or 

7i Bulletin No. 126 (supra), p. 132; Frankel & Dawson (supra), 
p. 3; Bulletin No. 90 (supra) ; see also 5 American Economic Review 
177. 

72 11 Columbia Law Review 36. 

73 Georgia Acts of 1855-1856, p. 155. 

74 Colorado Session Laws 1901, chapter 67. 



50 WORKMEN'S COMPENSATION AND INSURANCE 

death of certain persons in the Life- Saving Service 
in 1882; and after 1900 various branches of the mail 
service and some navy employees were included in 
this beneficent scheme. 75 

But even after the opening of the twentieth cen- 
tury, progress toward the solution of the problem 
of compensation for industrial accidents was slow. 
Every one perceived the evils of the existing situa- 
tion and admitted that the success of workmen's 
compensation in Europe warranted its adoption 
here; but there was no agreement as to which 
European model to follow. 76 In 1902 a very lim- 
ited provision was made by a Maryland statute for 
compulsory cooperative insurance in a few employ- 
ments; but this was declared unconstitutional be- 
cause of its improper delegation of judicial func- 
tions. 77 In 1903-4 a Massachusetts committee on 
relations between employer and employee sub- 
mitted to the legislature a compensation bill 
adapted from the English act of 1897; but no action 
was taken in the matter. 78 Similar committees in 
Illinois and other states in the next two or three 

75 Journal of Political Economy, vol. XXIII, pp. 807-808. 

76 See article by Willard C. Fisher in American Economic Review, 
vol. 5, at p. 223. 

77 prof. Wambaugh's article (see footnote 70), at p. 132, note 4. 

78 Fisher (see footnote 76), p. 223, note. 



THE RISE OF WORKMEN'S COMPENSATION 51 

years studied the subject, reported, and vanished 
from the pages of history without having achieved 
any substantial results. 

The Federal Employers' Liability Act of 1906 
need only be mentioned here. Its purpose was the 
regulation of the redress of injuries to railroad em- 
ployees ; but it was a true employers' liability law, 
and in no sense a workmen's compensation statute. 
It was declared unconstitutional as embracing intra- 
state matters, with which Congress had no power to 
deal ; 79 and a new act, framed with a view to avoid- 
ing the constitutional defects of the original statute, 
was passed in 1908. This latter law "establishes 
the liability of interstate railway employers for 
their negligence resulting in injury to their em- 
ployees, abolishing the defense of fellow-service, 
and modifying the defenses of contributory negli- 
gence and assumption of risks, and stands as the 
sum of present achievement in its territory." 80 
The act was amended in 1910. It is, as we have 
seen, an employers' liability rather than a work- 

79 Howard v. 111. Cent. R. Co. (First Employers' Liability Cases), 
207 U. S. 463. 

so Journal of Political Economy, vol. XXIII, p. 815. See article 
on The Federal Employers' Liability Act by William W. Thornton, 
in Case and Comment, vol. 22, pp. 323-329, for an excellent outline 
of the Act by an expert. Mr. Thornton's book — Federal Employers' 
Liability and Safety Appliance Acts — is the standard work on the 
subject. 



52 WORKMEN'S COMPENSATION AND INSURANCE 

men's compensation act; so we shall not need to 
scrutinize it further. 

In 1908 the United States also passed what has 
been termed a workmen's compensation act, 81 
though the fact that it applied only to employees of 
the enacting power and excluded injuries due to the 
negligence or misconduct of the workman has been 
said to deprive it of that character. 82 The purpose 
of the Act was to afford protection to "government 
employees engaged in hazardous occupations." It 
provided for the payment of full wages during dis- 
ability, a feature which has been criticized as tend- 
ing to encourage malingering ; 83 and had other seri- 
ous defects. Nevertheless, it marked a distinct ad- 
vance, from the point of view of economic theory, 
over any previous American statute. It has now 
been superseded by the new Federal Workmen's 
Compensation Act of September, 1916, wherein the 
amount of compensation payable during disability 
is reduced to two-thirds of monthly pay, and there is 
added the salutary provision that a partially dis- 
abled employee must accept suitable employment or 
forfeit his claims under the Act. 84 

si 35 U. S. Stat, at Large, 556. 

82Wambaugh (see footnote 70), p. 132, note 4. 

83 Journal of Political Economy, vol. XXIII, p. 811. 

84 Public, No. 267, 64th Cong. (H. R. 15316). Approved Septem- 
ber 7, 1916. 



THE RISE OF WORKMEN'S COMPENSATION 53 

In 1909, the agitation in the states first took effec- 
tive shape. That year saw the first special state 
commissions of inquiry, in Minnesota, Wisconsin 
and New York ; and also the impressive Workmen's 
Compensation conference in Atlantic City, from 
the twenty-ninth to the thirty-first of July. 85 
In 1909, too, Montana passed a compensation 
law applying to miners only, 86 which was after- 
wards declared unconstitutional on rather narrow 
grounds. 87 Another statute adopted in this year 
was that entitled Chapter 31 of the Consolidated 
Laws of New York, under the head of "Labor Law 
— Employers' Liability," which, as amended in 1910 
and 1915, constitutes an elective compensation law 
which has proved almost a dead letter. 88 

In 1910 New York passed a compulsory com- 
pensation law applying to certain hazardous occu- 
pations. Its fate — it was declared unconstitutional 
by the Court of Appeals — has been discussed at 
length elsewhere. 

It was in 1911 that the avalanche of workmen's 
compensation laws began. That year is memor- 

85 Fisher (see footnote 76), p. 223, note. 

se Bradbury, Workmen's Compensation and State Insurance Law 
(2d Ed.), p. 9. 

87 Cunningham v. Northwestern Improvement Co., 44 Mont. 108, 
119 Pac. 554. 

ss Bradbury (supra), p. 10. 



S4 WORKMEN'S COMPENSATION AND INSURANCE 

able for two decisions against the constitutionality 
of such acts — those of Montana and New York 
— but it is even more remarkable for the adoption of 
the compensation principle by California, Illinois, 
Kansas, Massachusetts, Nevada, New Hampshire, 
New Jersey, Ohio, Washington and Wisconsin. 
During the following year Arizona, Maryland, 
Michigan and Rhode Island saw the light; and in 

1913 New York passed a valid compensation act, 
together with Connecticut, Iowa, Minnesota, Ne- 
braska, Oregon, Texas and West Virginia. In 

1914 Kentucky and Louisiana joined the ranks; 
the Kentucky act, however, being later declared 
unconstitutional and superseded by a new one. 
During the year 1915, compensation laws were 
adopted for the first time in Alaska, Colorado, 
Hawaii, Indiana, Maine, Montana, Oklahoma, 
Pennsylvania, Porto Rico, Vermont and W} r oming. 
Kentucky finally passed a valid statute in 1916; 
and during the legislative sessions of 1917 Dela- 
ware, Idaho, New Mexico, South Dakota and Utah 
were added to the list of compensation states. As 
these pages go to press, word comes that the Vir- 
ginia legislature of 1918 has seen the light, and 
passed a compensation act over the governor's veto. 
These statistics represent merely the initial passage 



THE RISE OF WORKMEN'S COMPENSATION 55 

of such laws in the thirty-eight states and three ter- 
ritories in which they are now in force ; in addition, 
there have been countless amending acts and sup- 
plementary measures. 89 

In closing this long historical chapter, the writer 
wishes to emphasize that workmen's compensation 
has come to stay. In no jurisdiction where it has 
been adopted has it been abandoned ; 90 and if this 
record is maintained, we shall have good reason to 
hope that the goal of industrial peace will even- 
tually cease to be a mere glittering abstraction, and 
become a tangible reality. 

89 See the Digests of Workmen's Compensation laws published by 
the Workmen's Compensation Publicity Bureau; also Bulletins No. 
126 and 185 of the U. S. Bureau of Labor Statistics. For an account 
of the Virginia act of 1918, see The Weekly Underwriter, vol. 
XCVIII, p. 392 (March 23, 1918). 

so American Economic Review, vol. 5, pp. 222-223; Bulletin No. 
126, U. S. Bureau of Labor Statistics, p. 29. 



CHAPTER III 

QUESTIONS OF CONSTITUTIONALITY 

Perhaps the most original contribution of the 
United States to the science of government is the 
conception of our written Constitution as the su- 
preme law of the land, to which even the national 
legislature, chosen by the free suffrage of the peo- 
ple, must bow. As a natural result of this broad 
proposition, the courts have assumed the power, 
which they have exercised without serious challenge 
for over a century, of declaring void legislative 
measures in conflict with the Constitution. 1 And 
this power has been exercised, not only by the Fed- 
eral courts, but also by the courts of the States with 
reference to statutory enactments of their own leg- 
islatures, the validity of which they have ventured 
to test by both State and Federal Constitutions. 2 

iMarbury v. Madison, 1 Cranch 137, 1 Curtis 368 (1803). 

2 Ives v. South Buffalo Ry. Co., 201 N. Y. 271, 94 N. E. 431 (1911). 
That it is not altogether clear whether the court in the Ives case 
actually passed upon the Federal question, though it assumed to test 
the New York statute by both Federal and State constitutions, see 
Political Science Quarterly, vol. XXXII, pp. 546-547 (December, 
1917). 

56 



QUESTIONS OF CONSTITUTIONALITY 57 

Because of this peculiarity of the American sys- 
tem of government, the advocates of workmen's 
compensation in the United States have been con- 
fronted with a special difficulty wholly unlike any 
with which Europeans have had to cope. They 
have had not only to construct legislation which the 
Solons at the capital would consent to pass, but they 
have found that they must also convince the courts 
that it does not infringe any of the sacred Consti- 
tutional guarantees. 

This enforced testing of labor legislation by the 
principles of the fundamental law has not been alto- 
gether a bad thing. In the heat of party warfare, 
under the spell of ill-considered enthusiasms, the 
glittering desirability of the end to be attained by 
proposed legislation often blinds the majority to the 
incidental invasions of minority rights which the 
method employed entails. It is the part of pru- 
dence, perhaps, to leave to the sober afterthought 
of the courts the ultimate solution of the problem 
of constitutionality to which legislators have so 
often applied themselves after such imperfect delib- 
eration. 

But the complaint has been made, and with much 
reason, that the attitude of the courts with regard 
to constitutional questions arising out of workmen's 



58 WORKMEN'S COMPENSATION AND INSURANCE 

compensation has been obstructive and reactionary. 
One of the chief objections of the courts to the 
workmen's compensation principle has been that it 
makes the employer liable without proof of fault on 
his part. But liability without fault is not a new 
thing in our law. As has been pointed out by an 
eminent legal authority, trover, trespass, slander 
and libel, all ancient parts of our legal system, re- 
quire no moral obliquity; and there are examples 
of civil disabilities placed on men who are wholly 
blameless. 3 The very law of master and servant 
itself furnishes an illustration in the shape of the 
general liability of the master for the torts of the 
servant, whether authorized or ratified by him or 
not, which are done in the course of the servant's 
employment and the master's business. 4 The lia- 
bility in the latter case is to a third party, and the 
responsibility is said to arise out of the peculiar rela- 
tion created by the contract of employment; but it 
seems no more a violation of principle to hold the 
employer a warrantor of the safety of the employ- 
ment to the servant, than to make him generally 
responsible to all third parties for that servant's 
unauthorized wrongful acts. 

3 25 Harvard Law Rev. 134 (Dec. 1911). 
*Burdick, Law of Torts (3d Ed.), p. 155. 



QUESTIONS OF CONSTITUTIONALITY , 59 

Some of our courts, however, have taken a dif- 
ferent view. The first judicial pronouncement 
against the constitutionality of a state workmen's 
compensation act (if we except the unreported de- 
cision of a lower court of Maryland in 1902, from 
which no appeal was taken) 5 was that of the New 
York Court of Appeals in Ives v. South Buffalo 
Ry. Co. 6 The Ives case has had a profound effect 
on all subsequent legislation in the United States, 
and has caused the advocates of workmen's com- 
pensation in many jurisdictions to frame their acts 
on a very different plan. 7 

The act which was overthrown by the Ives case 
was chapter 674 of New York laws of 1910, 
which went into effect on June 25 of that year. It 
provided that employers, in certain occupations 
which were designated as especially hazardous, 
should be liable to pay compensation based upon 
wages in case persons in their service engaged in 
manual or mechanical labor should suffer in the 
course of the employment a bodily injury by an ac- 
cident arising out of the employment and in whole 
or in part caused by a necessary risk of the occupa- 

s Bradbury, Workmen's Compensation and State Insurance Law 
(2d Ed.), p. 9. 

6 201 N. Y. 271, 94 N. E. 431 (1911). 

7 Bradbury (supra), p. 1Q. 



60 WORKMEN'S COMPENSATION AND INSURANCE 

tion or by negligence of the employer or of any of 
his employees ; an exception being made in cases of 
injuries caused in whole or in part by the serious or 
willful misconduct of the injured workman. 8 A 
provision of the Act which can hardly be com- 
mended, in view of the radical change about to be 
effected in the preexisting law, was that it should 
take effect in less than ten weeks ; this is in strong 
contrast to the policy of foreign workmen's com- 
pensation laws, many of which allowed a year or 
more for the necessary re-adjustment of men's 
ideas. 9 

The New York statute was declared by the court 
in the Ives case to be in conflict with both the Fed- 
eral and state constitutions. The Fourteenth 
Amendment of the former, and Article I, section 
6 of the latter, forbidding the taking of private 
property without due process of law, were vio- 
lated, the judges said, by an act imposing upon an 
employer who had not been guilty of any fault, 
the obligation to pay compensation for injuries 

8 25 Harvard Law Rev. 135 — here there is an excellent summary 
of the Act. See also article on The Constitutionality of Workmen's 
Compensation and Compulsory Insurance Laws, in Case and Com- 
ment (Sept. 1915), pp. 275-280; and a discussion of The Workmen's 
Compensation Cases in Political Science Quarterly, vol. XXXII, pp. 
542-569 (December, 1917). 

9 25 Harvard Law Review 136. 



QUESTIONS OF CONSTITUTIONALITY 61 

occurring by reason of a danger which was in- 
herent in and inseparable from a particular em- 
ployment. 93 

It would be difficult to exaggerate the sensa- 
tion caused by this decision. Labor rose as a body 
in protest, and sober citizens who had been re- 
garded as pillars of the existing order railed 
against our "reactionary' ' courts. Recall of judi- 
cial decisions, till then a distrusted political 
nostrum, became a party issue. Socialists and 
financiers, laymen and sober legal reasoners, 10 
joined in denunciation of the New York Court of 
Appeals. 

One of the worst features of the situation, from 
the ooint of view of the courts' defenders, was the 
radical divergence of views which soon appeared 
among the different state tribunals. Only a few 
months after the decision in the Ives case, the Su- 
preme Court of the state of Washington upheld a 
workmen's compensation act essentially similar to 
the discarded New York statute, in the oft-quoted 
case of State ex rel. Davis-Smith Co. v. Clausen. 11 

9a But see footnote 2. 

io Such as Prof. Wambaugh. See his article in 25 Harvard Law 
Rev. 129-139, to which reference has already been made. See also 
note on Ives case in 11 Columbia Law Rev. 475-476. 

1U17 Pac. 1101 (Sept. 1911). 



62 WORKMEN'S COMPENSATION AND INSURANCE 

In the opinion, much stress was laid on the police 
power, which was held to justify such legislation, 
the court quoting 12 from Noble State Bank v. Has- 
kell 13 as follows : "It may be said in a general way 
that the police power extends to all the great public 
needs. It may be put forth in aid of what is sanc- 
tioned by usage, or held by the prevailing morality 
or strong and preponderant opinion to be greatly 
and immediately necessary to the public welfare." 
In referring to the Ives case, the Washington court 
said: 14 "The principle embodied in the statutes is, 
however, the same, and it must be conceded that 
the case is direct authority against the position w r e 
have here taken. We shall offer no criticism of the 
opinion. We will only say that notwithstanding 
the decision comes from the highest court of the first 
state of the Union, and is supported by a most per- 
suasive argument, we have not been able to yield 
our consent to the view there taken." 

The New York act had been compulsory, while 
the Massachusetts compensation law of 1911 was 
not; so the decision of the Supreme Judicial Court 
of the latter state in The Opinion of the Justices, 
209 Mass. 607, cannot be deemed a disaffirmance of 

12 At page 1110. 

13 219 U. S. 104 (1910). 

i* At page 1120 of Clausen case. 



QUESTIONS OF CONSTITUTIONALITY 63 

the doctrine of the Ives case. In fact, the court 
expressly distinguished that case, 15 and rested its 
decision on the ground that, in view of the non- 
compulsory nature of the statute under considera- 
tion, there was nothing that could be construed as 
violating the constitutional prohibition against the 
taking of private property without due process of 
law. 16 Nevertheless, there was a not unnatural 
popular notion that the court was hedging as a 
result of the clamor caused by the Ives case; and 
this impression was strengthened by the fact that 
the Act upheld, though not nominally compulsory, 
was so severe on the employer in taking away his 
common-law defenses as to be practically so. 17 

The case of Cunningham v. Northwestern Im- 
provement Co., 18 in which the Montana Miners' 
Compensation Law was held invalid, has been ad- 
verted to in a previous chapter. The difficulty 
which the Montana court had with the statute was 
that it submitted the employer to a double liability, 
as it failed to protect him after payment of compen- 
sation under the Act from an action at law for the 

is At page 610 of the opinion, 
is At page 612 of the opinion. 

17 See article by James A. Lowell on "Assumption of Risk and the 
Workmen's Compensation Act" in Massachusetts Law Quarterly, vol. 
1, no. 2 (February, 1916), at p. 49. 

18 119 Pac. 554 (1911), especially pp. 565-566. 



U WORKMEN'S COMPENSATION AND INSURANCE 

same injury. This was felt to be a denial of equal 
protection of the laws. It will be seen that this de- 
cision did not squarely condemn the principle of 
workmen's compensation, but merely one of the 
details of administration; in fact, the court ex- 
pressly stated that the passage of such an act was 
a proper exercise of the police power, was not in- 
valid as class legislation, and did not deprive the 
employer of "due process of law" in spite of the 
fact that it substituted a special proceeding to ascer- 
tain the amount of compensation for a trial by jury. 
The decision was of the helpful, constructive sort, 
and a credit to the tribunal which rendered it. 
Though the case destroyed the specific act, the un- 
prejudiced student must admit that the reasons for 
such action were especially strong; and the pro- 
gressive views which Mr. Justice Smith advanced in 
his able opinion showed the legislature the way to 
the excellent statute which Montana now possesses. 
Out of this mass of conflicting decisions one prop- 
osition came to be clearly derivable: a workmen's 
compensation law, if compulsory, is in danger of 
being declared unconstitutional by the courts; but 
an act which is elective in nature is not open to any 
of the constitutional objections yet advanced. 
Legislatures burning with enthusiasm for the prin- 



QUESTIONS OF CONSTITUTIONALITY 65 

ciple, but prudently desirous of avoiding any clash 
with the judiciary, began casting about for some 
method of dodging the issue of compulsion while 
yet creating a compensation system practically 
binding on all parties to contracts of employment. 

The ingenious scheme adopted in New Jersey is 
the first to merit attention. By Section II of an 
act passed in 191 1, 19 a system of workmen's com- 
pensation patterned on the English statute was in- 
troduced; but Section I contains an alternative 
modification of the common-law, abolishing the 
fellow-servant rule, assumption of risks, etc., but 
retaining the privilege of suit for injuries. The 
"alternative," however, is scarcely more than a 
nominal one; for every contract of hiring is pre- 
sumed to be made with reference to the provisions 
of Section II "unless there be as part of such con- 
tract an express statement in writing, prior to any 
accident, either in the contract itself or by written 
notice from either party to the other, that the pro- 
visions of Section II of this act are not intended to 
apply." 

It will be seen that, owing to this tricky presump- 
tion, the elective feature of the Act is greatly weak- 
ened. For not only are many employments en- 

19 N. J. Laws 1911, c. 95. 



66 WORKMEN'S COMPENSATION AND INSURANCE 

tered into so informally that the "express statement 
in writing" would never be thought of, but it is 
safe to say that any employer who requested pro- 
spective employees to sign such a statement would 
arouse so much hostility and suspicion that he would 
soon be glad enough to abandon the practice. 

Yet the New Jersey statute was held, and I 
think rightly, to be constitutional. 20 There was "no 
coercion," said the court; and, short of coercion, no 
form of inducement to parties to accept a compen- 
sation act seems to be invalid. In over twenty 
states, varieties of "elective compensation," follow- 
ing more or less closely the New Jersey plan of 
"presumptive acceptance," have been adopted. 21 

Whether attributable to the caution with which 
the state legislatures proceeded, or to a change of 
heart on the part of the courts, the fact remains 
that for three years after the Ives and Cunning- 
ham cases no judicial decrees of invalidity were pro- 
nounced against workmen's compensation acts. 

20 Sexton v. Newark District Telegraph Co., 86 Atl. (N. J.) 451, 
especially page 455, where it is said: "No coercion was exercised by 
the legislature upon either party to the contract of hiring. It is 
left entirely optional with them whether they will stand upon the 
1st or 2d sections of the act." 

2i See Digests published by the Workmen's Compensation Publicity 
Bureau; also texts of the acts. 



QUESTIONS OF CONSTITUTIONALITY 67 

The Illinois Supreme Court broke this record in 
Courter v. Simpson Construction Co., 22 decided in 
October, 1914. In that case, however, the consti- 
tutionality of the whole act was not attacked, but 
merely that of paragraph (f) of section 19, which 
provided for a review of the decisions of the indus- 
trial board by the Supreme Court of the state. The 
justices found that this was in conflict with section 
2 of Article 6 of the state Constitution, which gives 
the Supreme Court original jurisdiction only "in 
cases relating to the revenue, in mandamus, and 
habeas corpus"; and as the effect of the objection- 
able provision in the statute was to give the court 
original jurisdiction on certiorari, that portion was 
declared unconstitutional without affecting any of 
the other sections. The decision will therefore be 
seen to be on a very narrow ground ; and as it did not 
seriously affect the workings of the Act, but merely 
threw upon the Circuit Courts the duty of review- 
ing the findings of the industrial board which the 
legislature had sought to thrust on the higher tri- 
bunal, the result reached by the Illinois judges is 
not likely to arouse severe criticism. 

Kentucky has now a valid compensation law in 

22 264 111. 488, especially pp. 493-494. 



68 WORKMEN'S COMPENSATION AND INSURANCE 

Laws 1916, c. 33, whose constitutionality was up- 
held in Greene v. Caldwell; 23 but thorny roads had 
to be traversed before this desirable goal was at- 
tained. In Kentucky State Journal Co. v. Work- 
men's Compensation Board, 24 decided late in 1914, 
the Court of Appeals of the Blue Grass State had 
found Laws 1914, c. 73, in conflict with section 54 
of the state constitution, prohibiting the legislature 
from limiting the amount to be recovered for in- 
juries resulting in death, or for injuries to persons. 
A petition for re-hearing was denied. 25 Subse- 
quent to this Kentucky decision, the courts of that 
state were at pains to re-affirm all the old common- 
law doctrines applicable to industrial accidents. 26 
In justice to the court, however, it must be ad- 
mitted that the arbitrary nature of the fundamental 
law of Kentucky left a conscientious tribunal prac- 
tically no option. As Judge Dorsey said: 27 
"Whether the constitutional restrictions herein 
above discussed are wise or unwise, this court is 
bound to obey them." The real fault was in the 

23 186 S. W. (Ky.) 648 (1916). 
2*170 S. W. (Ky.) 1166. 

25 172 S. W. (Ky.) 674. 

26 180 S. W. (Ky.) 79 (fellow-servant) ; 180 S. W. (Ky.) 86 (as- 
sumption of risks) ; 180 S. W. (Ky.) 55 (duty of master to furnish 
safe appliances). 

27 At page 1171 of the case (170 S. W. 1166). 



QUESTIONS OF CONSTITUTIONALITY 69 

legislature, which should have made the Act op- 
tional, thus avoiding constitutional objections, as 
was finally done in the statute of 1916; or, if it were 
insistent on the more radical measure, should have 
delayed its passage until an amendment to permit 
of compulsory workmen's compensation laws could 
have been adopted by the people; a course which 
has been successfully pursued in California (1911), 
Ohio (1912) , New York (1913) , and Pennsylvania 
(1915). 2S 

The Texas Workmen's Compensation Law was 
for some time in a state of suspended animation, two 
intermediate appellate tribunals having given con- 
flicting decisions on the question of its validity. In 
the first of these cases, Memphis Cotton Oil Co. v. 
Tolbert, 29 the Court of Civil Appeals of Amarillo 
County held the act not violative of equal protection 
of the laws or due process under the Fourteenth 
Amendment of the Federal Constitution, and also 
expressly declared the statute to be within the police 
power and not contrary to public policy. It was 
suggested, but not decided, that the sections author- 
izing the creation and regulation of the Texas Em- 
ployers' Liability Association might violate the pro- 

28 See Digests of Workmen's Compensation Aid Bureau. 

29 171 S. W. (Tex.) 309 (December, 1914). 



70 WORKMEN'S COMPENSATION AND INSURANCE 

vision of the State Constitution relating to private 
corporations; but the court intimated that in such 
a case the objectionable sections might be elim- 
inated without affecting the rest of the Act. 

In absolute contradiction to the Tolbert case was 
Middleton v.Texas Power and Light Co., 30 decided 
about a month later by the Austin County Court of 
Civil Appeals. The court said: 31 "We have 
reached the conclusion that so much of the statute 
here involved as undertakes to deprive an employee 
of what otherwise would be his cause of action 
against his employer is unconstitutional and void. 
. . . Our reason for holding that the provision of 
the statute referred to is unconstitutional is based 
upon the fact that it leaves it optional as to the em- 
ployer, and makes it compulsory as to the employee, 
when the employer has elected to avail himself of 
the benefits of the statute." Due process of law 
and equal protection of the laws were both denied, 
the court found; and it pointed out that "it is be- 
yond the domain of legislative power to confer upon 
any person authority to say what particular law, or 
which of two particular laws, shall govern his rights 
and the rights of his employee as between them." 

80 178 S. W. (Tex.) 956 (January, 1915). 
si At page 957 of the opinion, 
s* At page 959 of the case. 



32 



QUESTIONS OF CONSTITUTIONALITY 71 

This decision presented a new and interesting 
phase of the constitutional question. The court did 
not object to the statute because it was compulsory 
— in fact, the decision in State ex rel. Davis-Smith 
Co. v. Clausen 33 was expressly distinguished on 
the ground that the act upheld in that case was com- 
pulsory as to both employers and employees. 34 It 
was because the law was binding on one class — the 
employees — and voluntary as to the other — the em- 
ployers — that it was overthrown. By one section, 
certain common-law defenses of the employer are 
abolished in personal injury suits; by another, em- 
ployees of those employers who subscribe to the Act 
lose any right of action arising out of injury re- 
ceived in the course of the employment, and they 
are forced to look solely to specified insurance asso- 
ciations or companies for compensation. In other 
words, the employer can elect whether he shall come 
under the Act and pay premiums to the Insurance 
fund, or stay outside and be deprived of certain 
common-law defenses ; but the employee has no elec- 
tion and is bound by the decision of his master in 
the matter. 

Whether the distinction really constitutes a seri- 
ous defect may well be doubted. The employee in 

33 117 Pac. (Wash.) 1101. s* At page 960 of the case. 



n WORKMEN'S COMPENSATION AND INSURANCE 

either case is given a claim to compensation consid- 
erably more substantial than that which he pos- 
sessed at common-law. The mere fact that the em- 
ployer is left to decide whether he shall submit to 
being sued for injuries to his workmen without set- 
ting up his special defenses, or agree to insure in 
accordance with the provisions of the Act, does not 
impress any great hardship on the employee. The 
latter is not deprived of his remedy, though the na- 
ture of it is altered. The one-sidedness of the 
arrangement is more apparent than real. It is a 
mere technical defect, which the court, in the light 
of the powerful presumption in favor of the valid- 
ity of acts of the legislature, might well have over- 
looked. To this view the highest court of Texas 
finally came in reversing the Middleton case on 
appeal; 35 though the particular line of argument 
adopted, with its resort to the fiction of an implied 
waiver, may be open to criticism. The court said : 
"The effect of the Act upon the rights of em- 
ployees cannot be properly weighed or determined 
without a due consideration of its aim and policy in 
their interest. Its theory, as it concerns them, is 
that the plan of compensation it provides for their 
injuries suffered in the course of their employment 

35 185 S. W. (Tex.) 556. 



QUESTIONS OF CONSTITUTIONALITY 73 

is more advantageous than a suit for damages. In 
the latter, the employee is compelled to assume the 
burden of establishing that his injury was caused by 
the employer's negligence or the negligence of a 
servant for which the employer is responsible. His 
suit fails if it is subject to any of the common law 
defenses, that is, if his own negligence was the 
proximate cause of the injury, or if the injury was 
due to a risk he assumed, or the negligence of a fel- 
low-servant. By the Act a fixed compensation is 
payable to him upon the mere happening of any 
injury in the course of the employment, or to his 
beneficiaries in the event of his death from the in- 
jury, without reference to any negligence on the 
part of the employer or his servants, and without 
regard to defenses available to the employer at 
common law. 

"With this as the evident spirit and design of the 
Act in the employee's interest, his entering the serv- 
ice of an employer who in his business pursuit is 
governed by the Act, or his remaining, after notice 
duly given, in the service of an employer who has 
adopted its plan of compensation and become sub- 
ject to it, is made to operate as a waiver of any cause 
of action against the employer on account of any 
injury suffered in the course of the employment, ex- 



74 WORKMEN'S COMPENSATION AND INSURANCE 

cept for exemplary damages in behalf of a surviving 
husband, wife, or heirs, as already noted. 

"Does this deprive the employee of any vested 
right or property right? It is clear that it takes 
from him no property right. . . . That which is 
withdrawn from the employee is merely his right 
of action against the employer, as determined by the 
rules of the common law, in the event of his future 
injury. . . . There cannot be a vested right, or a 
property right, in a mere rule of law." 

Though often discussed, the right of the legisla- 
ture to abridge or abolish the master's special de- 
fenses to an action by the servant for injuries re- 
ceived in the course of his employment, has been 
denied in none of the cases involving the constitu- 
tionality of workmen's compensation acts. Prob- 
ably this is because the United States Supreme 
Court expressly sanctioned such an alteration of the 
common law in the Second Employers' Liability 
Cases, 36 in which the constitutionality of the Fed- 
eral Employers' Liability Act of 1908 was upheld. 
In the course of the opinion, Mr. Justice Van 
Devanter refuted the opponents of the Act in these 
memorable words: 

"Of the objection to these changes, it is enough 

36 223 U. S. 1, 50. 



QUESTIONS OF CONSTITUTIONALITY 75 

to observe : First. 'A person has no property, no 
vested interest, in any rule of the common law. 
That is only one of the forms of municipal law, and 
is no more sacred than any other. Rights of prop- 
erty which have been created by the common law 
cannot be taken away without due process ; but the 
law itself, as a rule of conduct, may be changed at 
the will ... of the Legislature, unless prevented 
by constitutional limitations. Indeed, the great 
office of statutes is to remedy defects in the com- 
mon law as they are developed, and to adapt it to 
the changes of time and circumstances.' Munn v. 
Illinois, 94 U. S. 113, 134; (citing also other cases) . 
Second. The natural tendency of the changes de- 
scribed is to impel the carriers to avoid or prevent 
the negligent acts or omissions which are made the 
basis of the rights of recovery which the statute 
creates and defines ; and as whatever makes for that 
end tends to promote the safety of the employees 
and to advance the commerce in which they are 
engaged, we entertain no doubt that in making these 
changes Congress acted within the limits of the dis- 
cretion confided to it by the Constitution." 

But the act passed on in the case just quoted was 
only an employers' liability statute; and authorita- 
tive utterances of our highest tribunal with respect 



76 WORKMEN'S COMPENSATION AND INSURANCE 

to the constitutionality of workmen's compensation 
laws were long delayed. In Jeffrey Manufactur- 
ing Company v. Blagg, 37 in 1914, the Supreme 
Court held an Ohio compensation law valid; but 
that act was elective, and the case really only de- 
cided that the limitation of employers who would 
lose the defense of contributory negligence if they 
did not come under the act to those with five or 
more employees, was not an arbitrary and unreason- 
able classification. It was said in the opinion : 38 
"This is not a statute which simply declares that 
the defense of contributory negligence shall be 
available to employers having less than five work- 
men, and unavailable to employers having five or 
more in their service. This provision is part of a 
general plan to raise funds to pay death and injury 
losses by assessing those establishments which em- 
ploy five and more persons and which voluntarily 
take advantage of the law. Those remaining out 
and who might come in because of the number em- 
ployed are deprived of certain defenses which the 
law might abolish as to all if it were seen fit to do 
so." So it will be seen that the Blagg case goes 
little further than the Second Employers' Liability 

37 235 U. S. 571 (1914). 38 At page 578 of the case. 



QUESTIONS OF CONSTITUTIONALITY 77 

Cases ; in addition to upholding the abolition of com- 
mon-law defenses, it merely declares that a purely- 
elective compensation act is not in violation of the 
fundamental law. 

In January, 1916, however, in the case of North- 
ern Pacific Railway Co. v. Meese, 39 a compulsory 
compensation law finally received the sanction of 
the United States Supreme Court. The Washing- 
ton act, in making compensation the exclusive rem- 
edy for injuries sustained at a certain plant, was 
held not to violate the equal protection clause of 
the Fourteenth Amendment. 

In closing this review of the important cases deal- 
ing with the constitutionality of workmen's com- 
pensation laws, it is fitting that the decisions in 
which the principle was finally vindicated in New 
York State, the scene of its early vicissitudes, should 
be referred to. The opinion of Mr. Justice Miller, 
of the New York Court of Appeals, in Jensen v. 
Southern Pacific Company, 40 which upheld the 
validity of the present New York act, is so illu- 
minating, and so thoroughly in accord with the 

39 239 U. S. 614 (January, 1916). 

40 215 N. Y. 514, 528 (July, 1915) ; reversed 244 U. S. 205, but not 
on broad constitutional grounds, only the attempted extension of the 
act to admiralty matters within the federal jurisdiction being con- 
demned. 



78 WORKMEN'S COMPENSATION AND INSURANCE 

spirit of modern labor legislation, that I have ven- 
tured to quote from it at sufficient length to illus- 
trate the line of reasoning adopted: 

"This subject should be viewed in the light of 
modern conditions, not those under which the com- 
mon-law doctrines were developed. With the 
change in industrial conditions, an opinion has grad- 
ually developed, which almost universally favors 
a more just and economical system of providing 
compensation for accidental injuries to employees 
as a substitute for wasteful and protracted damage 
suits, usually unjust in their results either to the 
employer or the employee, and sometimes to both. 
Surely it is competent for the state in the promotion 
of the general welfare to require both employer 
and employee to yield something toward the estab- 
lishment of a principle and plan of compensation 
for their mutual protection and advantage. Any 
plan devised by the wit of man may in exceptional 
cases work unjustly, but the act is to be judged by 
its general plan and scope and the general good to 
be promoted by it. Fortunately the courts have 
not attempted to define the limits of the police 
power. Its elasticity makes progress possible un- 
der a written constitution guaranteeing individual 
rights. The question is often one of degree. The 



QUESTIONS OF CONSTITUTIONALITY 79 

act now before us seems to be fundamentally fair to 
both employer and employee. Of course, I do not 
speak of details, which may or may not be open to 
criticism, but which, granting the validity of the 
underlying principle, are plainly within the prov- 
ince of the legislature. It is not open to the ob- 
jections found to be fatal to the act considered in 
the Ives case. It is plainly justified by the amend- 
ment to our own State constitution and the decisions 
of the United States Supreme Court, notably in the 
Noble State Bank case, make it reasonably certain 
that it will be found by that court not to be violative 
of the Constitution of the United States." 

The confidence of Mr. Justice Miller that the 
highest tribunal in the land would find the New 
York act, in its main outlines, not violative of the 
fundamental Constitutional guarantees was justi- 
fied by the decision in New York Central R. It. Co. 
v. White. 41 The Jensen case itself, however, was 
reversed by the Supreme Court, on the ground that 
the extension of the provisions of the compensation 
act of New York to foreign vessels entering her 
ports, interfered with the powers of Congress over 
interstate and maritime affairs. The general valid- 

41243 U. S. 188, affirming 216 N. Y. 653. See the ConsitutionaL 
Review, vol. II, p. 27 (January, 1918). 



80 WORKMEN'S COMPENSATION AND INSURANCE 

ity of the act, however, as settled by the White case, 
was conceded. 42 

There may well be doubt as to whether the de- 
cisions upholding the constitutionality of the pres- 
ent New York statute are reconcilable with the Ives 
case. As a recent writer has pointed out, the dif- 
ference between the acts construed only accounts in 
part for the difference in the result; the difficulty 
as to the Fourteenth Amendment of the Federal 
Constitution is equally present in both cases. 43 
But whether the Court of Appeals has receded from 
its original position or not, the fact remains that 
New York now has a valid compensation law, and 
one which, with its insurance provisions and more 
equal distribution of burdens, is better than its pred- 
ecessor. 44 

On the same day that the New York statute was 
upheld in the White case (March 6, 1917) the Su- 

42 Southern Pacific Company v. Jensen, 244 U. S. 205. To over- 
come the effect of the decision so far as the admiralty feature is con- 
cerned, an act of Congress has been passed saving to claimants their 
rights under state compensation laws in admiralty cases. Pub., No. 
82, 65th Congress. 

43 Bench and Bar, vol. 10, p. 397 (January, 1916). Prof. Powell, 
in an interesting article, has intimated that the Jensen case more 
properly turned on the application of the Federal, and the Ives case 
on the State constitution. Journal of Political Economy, vol. 
XXXII, pp. 549-550 (December, 1917). 

44 See article by Miles M. Dawson in Case and Comment, vol. 22, 
pp. 275-280 (September, 1915) ; also address by John Mitchell before 



QUESTIONS OF CONSTITUTIONALITY 81 

preme Court of the United States handed down 
opinions sustaining the acts of Iowa and Washing- 
ton. The Iowa decision 45 does not consider major 
issues; 46 but the result reached in Mountain Tim- 
ber Co. v. Washington, 47 a five to four pronounce- 
ment in favor of the compensation law of the latter 
state, is of the deepest interest. 

The industries of the state of Washington are 
divided, by its compensation act, into classes, on 
the basis of their hazardous character; and each em- 
ployer in each class is subjected to compulsory 
assessments for a state fund, out of which is paid 
compensation for all injuries occurring to em- 
ployees in that class of establishments. The rates 
of assessment vary with the degrees of hazard in 
the different groups of industries; and reclassify- 
ing and readjustment of rates are provided for. 

The chief difficulty which the court had with this 
statute was with regard to the reasonableness of the 
method adopted to impose the cost of the industrial 

the American Association for Labor Legislation, reprinted in the 
American Labor Legislation Review, vol. 5, pp. 15-19 (March, 1915), 
in which Mr. Mitchell praises the success of the New York act, 
which he says pleases both employer and employee. 

45 Hawkins v. Bleakly, 243 U. S. 210. 

46 Political Science Quarterly, vol. XXXII, pp. 553-554 (December, 
1917). 

« 243 U. S. 219. 



82 WORKMEN'S COMPENSATION AND INSURANCE 

injuries on the employers; but Mr. Justice Pitney 
repelled the suggestion that the losses in any given 
class might be so heavy that the assessments re- 
quired from employers in that class would leave no 
sufficient margin for reasonable profits, by remark- 
ing that any industry in which the "human 
wastage" was so great might be prohibited alto- 
gether. This, as has been pointed out, is "a signifi- 
cant rebuke to one of the arguments by which the 
common law of assumption of risks used to be sup- 
ported — the argument that if employers rather than 
employees were compelled to assume the risk, busi- 
ness could not be carried on." 48 The decision is the 
final vindication before the highest tribunal of the 
land of the compulsory state insurance idea as ap- 
plied to the field of industrial accidents. It opens 
the way for the free expansion of the principle in 
the legislation of the United States. 

Questions of constitutionality are riot now of as 
vital interest as they were a few years ago. The 

48 Prof. Thomas Reed Powell, in Quarterly Journal of Economics, 
vol. XXXII, pp. 561-562 (December, 1917). The reasoning of the 
court in the Mountain Timber case was a little devious; thus, the act 
was said to be in part an "occupation tax" on certain forms of in- 
dustry, in part a plan for industrial pensions, and valid as a proper 
exercise of the taxing power as well as a reasonable regulation of 
industry. The four dissenting judges did not indicate their ground 
of disagreement. See The Constitutional Review, vol. II, p. 28 (Jan- 
uary, 1918). 



QUESTIONS OF CONSTITUTIONALITY 83 

increasing acquiescence of all classes of men in the 
wisdom of providing for the victims of industrial 
accidents by means of some form of insurance has 
had a profound effect on the judicial attitude to- 
wards the subject. So, whether the bill prepared 
by the legislature creates a state insurance fund, or 
merely fixes the liability of the employer, leaving 
the various actuarial problems to be worked out 
by private companies, the courts have shown an in- 
creasing readiness to accept the proposed solution 
of a difficult branch of the labor problem at its own 
valuation. And if it be true, as has been asserted, 
that "no state or country has ever reverted to the 
liability system after having made trial of the prin- 
ciple of compensation," 49 judicial interference, 
where it occurs, is likely to have no more profound 
effect than to put a temporary check on an en- 
thusiasm that will not be restrained, to delay for a 
brief space the advance of inevitable progress. 

49 Journal of Political Economy, vol. XXIII, p. 821 (October, 
1915). 



CHAPTER IV 

COMPENSATION LEGISLATION IN THE 
UNITED STATES 

In an essay of this scope and character, an ex- 
haustive review of the manifold provisions of the 
workmen's compensation acts now in force in thirty- 
eight states and three territories would be inappro- 
priate. Concise digests, easily available to the stu- 
dent, are infinitely preferable for reference work; 
nor could we hope to present the vast mass of ma- 
terial in a form at all comprehensible without adopt- 
ing the tabular digest method. In the present 
chapter, therefore, the writer has merely under- 
taken to compare important and typical features of 
laws in force in different jurisdictions, with a view 
to giving the reader a good general idea of the form 
and extent of such legislation in this country, and 
indicating the points of difference which have given 
rise to the major problems of the subject. For 
clearness' sake, the discussion in each of the follow- 
ing sections has been limited to the topic given, 

84 



COMPENSATION LEGISLATION 85 

though, of course, the divisions are arbitrary and the 
subjects inter-related. 

(1) Employments Covered. The New Jersey 
Act automatically extends to a larger group of em- 
ployments than the compensation law of any other 
state. 1 All private employments are covered, ex- 
cept casual ones ; and all public employments except 
elective officials and those receiving a salary of more 
than $1,200 a year. The Act is unique in that it 
extends to domestic and farm labor, branches of 
service to which legislatures have been reluctant to 
apply the workmen's compensation principle. The 
Federal Compensation Law alone is of broader ap- 
plication, covering all civil employees of the United 
States Government. 1 * 

The provisions of the various state statutes in 
this connection are of two general kinds. One 
group consists of the laws which have been framed 
with the old theory, the theory that lay back of the 

i In making this statement the author has taken into consideration 
the semi-compulsory nature of the New Jersey act, which applies 
automatically to all employments covered, though the presumption 
of acceptance may be overcome by notice in writing to the contrary. 
Many states permit all labor contracts to be made under the pro- 
visions of the compensation law if the parties so agree in writing, 
though the statutes apply automatically to none or only a limited 
class. See, e. g., Michigan Public Acts 1912 (1st Extra Session), No, 
10, Pt. I, sees. 5, 7; Idaho Laws 1917, c. 81, sees. 2-3. 

ia Blanchard, Liability and Compensation Insurance, p. 108. 



86 WORKMEN'S COMPENSATION AND INSURANCE 

original New York act, in mind — namely, that men 
engaged in extra-hazardous occupations are en- 
titled to special favor, and that they should be com- 
pensated as a matter of right for injuries sustained 
in the course of their work, while employees sub- 
jected to no unusual hazard should be left to the 
ordinary legal remedies. The other group of laws 
discards this theory, and gives to the compensation 
principle a general application, though excepting 
certain limited classes of employments for reasons 
of policy or convenience. 

The author has argued to no purpose if he has 
not already convinced the reader that the narrow 
view taken by the framers of the first group of 
statutes is an erroneous one. Mere degree of haz- 
ard in the employment should not be the criterion of 
whether a workman actually disabled should be re- 
lieved or not ; reasons couched in social necessity and 
profound economic principle demand that work- 
men's compensation be extended to all phases of 
industrial life. Nevertheless, a surprising number 
of states cling to the old discredited theory. In 
New York the legislature has undertaken the tre- 
mendous task of enumerating the hazardous em- 
ployments in which it feels compensation should be 
permitted, and has already discovered 44 distinct 



COMPENSATION LEGISLATION 87 

groups of such occupations. 2 The Kansas law- 
makers are content with a more general description 
of dangerous occupations, and have so denomi- 
nated all employments (in which 5 or more are en- 
gaged) carried on "in or about a railway, factory, 
mine or quarry, electric, building or engineering 
work, laundry, natural gas plant, county and muni- 
cipal work, and all employments wherein a process 
requiring the use of any dangerous explosive or 
inflammable materials is carried on, which is con- 
ducted for the purpose of business, trade or gain." 3 
The opposite extreme is reached in Alaska, where 
compensation is provided for only in employments 
connected with mining operations in which 5 or 
more are engaged. 4 

The immense possibilities of litigation under 
statutes like those we have just discussed will at 
once occur to the reader. The line of distinction be- 
tween affiliated groups of industries is often ill- 
defined, and cases are almost certain to arise in any 
jurisdiction which has sought to enumerate the "ex- 
tra-hazardous" industries, in which an employee in- 

2 N. Y. Laws 1913, c. 816, sec. 2, as amended by Laws 1916, c. 622, 
and Laws 1917, c. 705. 

s Kan. Gen. Stat. 1915, sees. 5900-5903, as amended by Kan. Laws 
1917, c 226. 

* Alaska Laws 1915, c. 71, sees. 1, 38-39. 



88 WORKMEN'S COMPENSATION AND INSURANCE 

jured in a similar, perhaps more dangerous, line of 
work, seeks to bring himself under the act. An- 
other weakness is that any enumeration is bound to 
be incomplete, since new industries spring up al- 
most overnight; and the legislatures will be kept 
busy revising the lists. Moreover, the very theory 
on which these acts are based is bound to be trans- 
gressed. For example, the Kansas act, in enumer- 
ating hazardous occupations, includes all those car- 
ried on in a "factory," whereas it is a matter of 
common knowledge that the factories in certain 
lines of business where little machinery is used, are 
among the least dangerous working-places in the 
entire industrial field. 

By far the larger number of workmen's compen- 
sation states, however, have followed the more lib- 
eral policy of including all employments except 
those expressly excluded. The New Jersey act, 
as we have seen, is the most sweeping in this respect ; 
although Massachusetts, which includes all private 
employments in the usual course of trade or busi- 
ness of the employer, except on vessels engaged in 
foreign or interstate commerce, and also includes 
public employments under the commonwealth, and 
elsewhere where the municipality, county, or other 
employer consents, runs New Jersey a close second 



COMPENSATION LEGISLATION 89 

in liberality. 5 The compensation law of Michigan 
does not apply automatically, but requires an act 
of election on the part of the employer; otherwise 
this statute would have the palm for covering the 
widest range of employments, all public, except as 
officials, and all private, except casual or not in the 
usual course of trade, business, etc., of the em- 
ployer, being included. 6 

An almost universal tendency to treat certain 
occupations as outside the proper scope of a work- 
men's compensation act is observable. Chief 
among these exclusions, and the cause of much 
wrangling, are two classes of employment com- 
monly grouped together — farm labor and domestic 
service. Among others, the statutes of Idaho, 
Iowa, Minnesota, South Dakota, Texas and Utah 
refuse compensation to the farmhand and the house- 
hold servant. 7 The reasons for such exclusion seem 

5 Mass. Acts 1911, c. 751, Pt. V, sec. 2, as amended by Acts 1913, 
c. 568, and Acts 1914, c. 708; also Acts 1913, c. 807. 

sMicE. Pub. Acts 1912 (1st Extra Session), No. 10, Pt. I, sees. 5, 7. 

7 Idaho Laws 1917, c. 81, sees. 2-3; Iowa Code, 1913 Supplement, 
sec. 2477 m (a), m 16 (a) (b), as amended by Laws 1917, c. 418, 
270; Minn. Gen. Stat. 1913, sees. 8202, 8230d, g, as amended by Laws 
1915, c. 193, 209; So. Dak. Laws 1917, c. 376, sees. 8, 16, 55b; Tex. 
Laws 1913, c. 179, Pt. I, sec. 2, Pt. IV, sec. 1, as amended by Laws 
1917, c. 103; Utah Laws 1917, c. 100, sees. 51-52. The exemption 
of agricultural and other groups of employments from the compen- 
sation acts is probably due in large measure to politics. Rhodes, 
Workmen's Compensation, p. 136. 



90 WORKMEN'S COMPENSATION AND INSURANCE 

to be that labor of this sort is ordinarily migratory 
and uncertain; that the employer is commonly a 
small householder or farmer with limited means and 
hence seldom in a position to pay out large sums in 
compensation; that the close personal relationship 
existing between such classes of servants and their 
masters makes it possible to apply with little diffi- 
culty the common-law tests of comparative fault — 
in short, reasons of convenience. In reply it may 
be said that the difficulty owing to the comparative 
poverty of the employer may be solved by making 
him carry insurance, the premiums of which would 
be small in proportion to the smallness of the risk 
and the brevity of the term of the employment ; that 
there is no difference in principle between an injury 
received in running a threshing-machine and one 
sustained in operating a loom — both ought to be 
compensated; and that the argument rising from 
the personal relationship of employer and employee 
is inapplicable to large-scale farming, and, often, 
to pretentious domestic establishments. 

Casual employments, or those not in the ordinary 
course of the trade or business of the employer, are 
excluded from practically all American compensa- 
tion acts. 8 The writer has elsewhere stated his 

8 See e.g., Del. Laws 1917, c. 233, par. 3193qq, sec. 136; N. J. Laws 



COMPENSATION LEGISLATION 91 

reasons for maintaining that such employees are 
entitled to as much consideration as those whose 
work is of a more permanent or regular nature. 
The fact remains, however, that the opposite view 
has commended itself to nearly all American legis- 
latures. 9 

Some states have deemed it advisable to avoid 
conflicts with the Federal workmen's compensation 
act by excluding from the operation of the local 
statutes employees on railroads, or vessels in inter- 
state or foreign commerce. 10 More commonly, 
however, the method followed to avoid jurisdic- 
tional complications is to declare the state law in- 
operative in cases to which the Federal law ex- 
tends. 11 

In addition to the more general classes of ex- 
cluded employments which we have discussed, the 
idiosyncrasies of law-makers, or the peculiar condi- 

1911, c. 95, par. 23; Minn. Gen. Stat. 1913, sec. 8202, as amended by 
Laws 1915, c. 193; Utah Laws 1917, c. 100, sec. 51 (2). 

s Nevada seems to be an exception. Nev. Laws 1913, c. Ill, sees. 
1, 43, as amended by Laws 1915, c. 190. 

io See, e.g., Mass. Acts 1911, c. 751, Pt. V, sec. 2, as amended by 
Acts 1913, c. 568, and Acts 1914, c. 708; Minn. Gen. Stat. 1913, sec. 
8202, as amended by Laws 1915, c. 193; Tex. Laws 1913, c. 179, Pt. 
I, sec. 2, as amended by Laws 1917, c. 103. 

ii See, e.g., Del. Laws 1917, c. 233, par. 3193ww, sec. 142; Idaho 
Laws 1917, c. 81, sec. 109; New Mex. Laws 1917, c. 83, sec. 11; So. 
Dak. Laws 1917, c. 376, sec. 17. 



92 WORKMEN'S COMPENSATION AND INSURANCE 

tions in certain states, have given rise to a number 
of anomalous exclusions, which have found favor 
only in a few jurisdictions. The Iowa law, for 
example, excludes employees "engaged in clerical 
work only," and, by an amendment of 1917, per- 
sons receiving benefits from any "firemen's pension 
fund" or "policemen's pension fund." 12 Workers 
for charitable organizations are excluded in some 
states, 13 outworkers 14 and members of the employ- 
er's family living in his house 15 in others. A very 
common provision is that employers with less than 
a certain number of workmen — variously fixed at 
three, four or five — are not bound by the compensa- 
tion law, though they may elect to come under its 
provisions. 16 For reasons which we have already 
outlined, these distinctions based obviously on the 
employer's conjectural ability to pay seem to us 
unsound. 

Where public employments are covered by the 

12 Iowa Code, 1913 Supplement, sec. 2477 m (a), m 16 (b), as 
amended by Laws 1917, c. 270, 418. 

is See, e. g., Idaho Laws 1917, c. 81, sec. 3. 

i* See, e.g., Del. Laws 1917, c. 233, par. 3193qq, sec. 136; Idaho 
Laws 1917, c. 81, sec. 3; Conn. Laws 1913, c. 138, sec. 43, as amended 
by Laws 1915, c. 288. 

15 See, e. g., Idaho Laws 1917, c. 81, sec. 3. 

16 See, e.g., Rhode Island Laws 1912, c. 831, sec. 3; Utah Laws 
1917, c. 100, sec. 51; Tex. Laws 1913, c. 179, sec. 2, as amended by 
Laws 1917, c. 103. 



COMPENSATION LEGISLATION 93 

compensation acts — and this is true in most states — 
the policy has generally been to exclude elective 
officials, and very often those receiving more than a 
certain sum as yearly salary. 17 The writer is at a 
loss to determine what has actuated the first of 
these distinctions, unless it be a vague fear that 
compensation acts might become involved in poli- 
tics, or some intricate theory that there is no real 
wage loss in such cases. The reason for the exclu- 
sion of the high-salaried man is less obscure, as such 
an one is deemed to be so high on the social scale, 
and to have had such opportunities to save and to 
insure himself, that there are not such strong rea- 
sons of public policy for protecting him as in the 
case of the indigent workman. Even conceding 
this, however, it is hard to see any occasion for mak- 
ing a distinction on such purely artificial grounds, 
especially as the public should be a model employer. 
The writer would like to be able to say that the 
trend of recent legislation has been distinctly away 
from the narrow type of workmen's compensation 
act, and towards a more and more extensive appli- 
cation of the theory of professional risk; but such 
a statement would hardly be borne out by the facts. 
Five states adopted compensation laws for the first 

17 See, e. g., N. J. Laws 1913, c. 145; Utah Laws 1917, c. 100, sec. 51. 



94 WORKMEN'S COMPENSATION AND INSURANCE 

time in 1917 — Delaware, Idaho, New Mexico, 
South Dakota and Utah. 18 Of these, New Mexico 
followed the antiquated scheme of covering only 
enumerated extra-hazardous employments; New 
Mexico and Utah extended compensation pro- 
visions to private employments only when four, and 
Delaware when five, or more were employed; all 
five states excepted casual employees; while farm 
labor and domestic service were expressly excluded 
by Delaware, Idaho, New Mexico and South Da- 
kota. Outworkers are excepted in Delaware and 
Idaho; and the last-named state also excludes em- 
ployees of charitable organizations and members 
of the employer's family dwelling in his house. 
Delaware makes no provision for public employ- 
ments; South Dakota covers them subject to sub- 
stantially the same restrictions as in the case of 
private occupations; Idaho and Utah grant com- 
pensation to all public servants except elective of- 
ficials and those whose salary exceeds $2,400 a year. 
(2) Injuries covered. The phrase used in the 
English act — "injury by accident arising out of 
and in the course of the employment" — has been 
adopted in most of the American states. That it 

is Del. Laws 1917, c. 233; Idaho Laws 1917, c. 81; New Mex. Laws 
1917, c. 83; So. Dak. Laws 1917, c. 376; Utah Laws 1917, c. 100. 



COMPENSATION LEGISLATION 95 

is open to serious criticism as a description of the 
policy of the acts, has been intimated in an earlier 
chapter; but "the full expression has been inter- 
preted so generously in British and American 
courts that it permits awards for nearly or quite all 
disabilities, which can be traced to the employment 
of the disabled." 19 For instance, awards have been 
given for death by the unintended acts of another 
employer's servant, 20 death of an ice-driver by light- 
ning while seeking shelter under a tree, 21 and injury 
due to a fellow-employee's disobedience of a fore- 
man's orders. 22 But the general subject has been 
covered already in our consideration of the British 
Act; and it will be more useful here to discuss 
special features, such as the provision made by 
American acts in the case of injuries due to indus- 
trial disease. 

So liberal has been the judicial interpretation of 
the terms "injury" and "personal injury," that 
where they are used without further qualification 
they will generally be construed to include both 

is Willard C. Fisher in Quarterly Journal of Economics, vol. XXX, 
p. 32 (November, 1915). 

20 Bryant v. Fissel, 86 Atl. (N. J.) 458. 

2i State ex rel. People's Coal and Ice Co. v. District Court of 
Ramsay County, 153 N. W. 119. 

22 Scott v. Payn Bros., 89 Atl. (N. J.) 927. 



96 WORKMEN'S COMPENSATION AND INSURANCE 

disease and aggravation of existing disease. 23 But 
the requirement of accidental origin has limited the 
cases in which compensation can be recovered for 
disease arising out of the employment to those in 
which the contraction of it can be traced to a par- 
ticular mishap ; and there are many specific restric- 
tions in the various statutes. Thus, in Hawaii, 
disease is expressly excluded unless it results from 
injury; and similar provisions are found in Indiana, 
Iowa, Delaware, Utah, South Dakota, and most of 
the states except those which, like Kansas, Michi- 
gan, Minnesota, Massachusetts, and New Jersey, 
are silent on the subject. 24 Special provisions as 

23 Fisher (see footnote 19), at pages 46-47. But a disease which 
is idiopathic — i. e., develops gradually or at least imperceptibly and, 
while it may be attributable to external conditions, is also in part 
dependent on conditions inherent in the individual — cannot be re- 
garded as an injury by accident; there is also very strong authority 
against compensating for purely occupational diseases even when the 
act makes no reference to a necessity of accidental origin. Kiser, 
Workmen's Compensation Acts, pp. 65-67. 

24 Hawaii Acts 1915, No. 221, section 60d; Indiana Laws 1915, c. 
106, sec. 76d; Iowa Code, 1913 Supplement, sec. 2477-m 16 (g) ; Del. 
Laws 1917, c. 233, par. 3193ss, sec. 138 (c) ; Utah Laws 1917, c. 100, 
sec. 52 (5); So. Dak. Laws 1917, c. 376, sec. 55d. Kan. Gen. Stat. 
1915, Chapter 61, Article 6, as amended by Laws 1917, c. 226; Mich. 
Pub. Acts 1912 (First Extra Session), No. 10, as amended by Pub. 
Acts 1913, Nos. 50, 79, 156, 259, and Pub. Acts 1915, Nos. 104, 153, 
170, 171, and Pub. Acts 1917, Nos. 41, 206, 235, 249; Minn. Laws 1913, 
c. 467, as amended by Laws 1915, c. 193, 209, and Laws 1917, c. 302, 

-351; Mass. Acts 1911, c. 751, amended in accordance with Acts 1912, 



COMPENSATION LEGISLATION 97 

to injury resulting in hernia are found in Idaho, 
New Mexico, Texas, and some other states. 25 
Montana excludes disease entirely, except hernia. 20 
In a few states, the policy of compensating cases 
of disease resulting from injury of an accidental 
nature has been affirmatively declared; but Cali- 
fornia alone frankly includes occupational dis- 
ease. 27 

It will be seen that the legislatures have shown 
little eagerness to extend the compensation prin- 
ciple along these lines. The most liberal of the 
statutes (outside of that of California) are 
merely declaratory in this respect of the common 
law, which includes within the definition of "ac- 
cidental injury" disease and infection naturally 
resulting therefrom. From the point of view of 
social justice this is most unfortunate. An em- 
ployee in a paint factory is much more likely to 

c. 172, 571, Acts 1913, c. 48, 445, 448, 568, 696, 746, Acts 1914, c. 338, 
708, Acts 1915, c. 123, 275, 314, Acts 1917, c. 198, 249, 269, 297; N. J. 
Laws 1911, c. 95, as amended by Laws 1913, c. 174, Laws 1914, c. 244. 

25 Idaho Laws 1917, c. 81, sec. 22; New Mex. Laws 1917, c. 83, sec. 
17; Tex. Laws 1913, c. 179, sec. 12b (as added by Laws 1917, c. 103) ; 
etc. 

26 Mont. Laws 1915, c. 96, sees. 6q, 16, 16j. 

27 See, e. g., Tex. Laws 1913, c. 179, Pt. IV, sec. 1, as amended by 
Laws 1917, c. 103; N. Y. Consol. Laws, c. 67, sec. 3 (7). Cal. Laws 
1917, c. 586, sec. 3 (4). 



98 WORKMEN'S COMPENSATION AND INSURANCE 

contract a case of lead poisoning than to be disabled 
by a fall; the disease is as serious or more so than 
the accident; it arises out of and in the course of 
his employment; it results in a loss of earning 
power; and yet he will receive no compensation 
under American laws. The danger of contracting 
an occupational disease is just as much a risk of the 
employment in which a workman is engaged, as a 
tangible physical injury; it is accidental in the 
broad sense that in most cases it cannot be foreseen ; 
and if the theory of professional risk is sound, the 
industry should bear the burden of compensating 
the victims as well of the diseases as of the accidents 
for which it is responsible. 

Courts and special tribunals, of a progressive 
cast, have in a few instances rendered decisions 
which may be construed as awarding compensation 
for occupational diseases accidentally contracted, 
on the theory that these really constitute accidental 
injuries; 28 but the weight of judicial opinion, and, 

28 See The Labor Gazette, vol. 1, p. 53 (February, 1916), com- 
menting on a decision of the Department of Labor of this sort; also 
In re Doherty (1915) 222 Mass. 98, 109 N. E. 887. The eventual 
coverage of occupational diseases by compensation acts, "either by 
express legislation or by construction of the law, may be regarded 
as only a logical development." Rhodes, Workmen's Compensation* 
p. 137. 



COMPENSATION LEGISLATION 99 

it must be admitted, of sound judicial opinion, is 
against thus distorting the language of the stat- 
utes. 29 If the great reform of adding occupational 
disease to the subjects of compensation is to be ac- 
complished, our legislatures must follow the lead of 
England and other progressive nations in enacting 
it into law. 

Though most of our states have been satisfied 
with the borrowed formula of "personal injuries 
arising out of and in the course of the employment," 
a few have added to or amended it in describing the 
class of injuries covered. Thus, in Arizona the 
injury must also be due to a necessary risk of the 
employment or to the failure of the employer or any 
of his employees to exercise due care or comply 
with any law. 30 In Colorado, the workman must 
have been performing service arising out of and in 
the course of the employment when injured to be 
entitled to compensation. 31 The Oregon act in- 
sists that the injury shall be by violent or external 
means; while in Washington only personal injuries 
sustained while upon the premises or at the plant 

29Honnold, Workmen's Compensation, pp. 536-544; Kiser, Work- 
men's Compensation Acts, p. 69. 

so Ariz. Rev. Stat. 1913, p. 1054, sec. 2. 
3i Colo. Laws 1915, c. 179, sec. 8. 



100 WORKMEN'S COMPENSATION AND INSURANCE 

of the employer, or in the course of the employ- 
ment away from the plant, will sustain a claim. 32 
In Wisconsin, compensation will be paid only to 
those workmen who were engaged at the time of the 
injury in performing service growing out of and 
incidental to the employment. 33 It will be seen 
that most of these variations on the old theme add 
little to it ; their presence in the statutes is no doubt 
due to attempts on the part of inexpert draftsmen 
to make their meaning unmistakably clear. 

(3) Forfeiture for misconduct. Under almost 
all of the American statutes, some sort of miscon- 
duct on the part of the injured employee will pre- 
vent him from recovering compensation. The two 
instances in which awards are most commonly de- 
nied are: (1) where the employee's intoxication 
was a proximate and efficient cause of the injury; 
(2) where the injury was self-inflicted. In addi- 
tion, "willful misconduct," consisting in disobedi- 
ence of orders, failure to use safety appliances, de- 
liberate breach of statutory regulations, and 
culpable negligence, is sometimes made a cause of 
forfeiture. 

A rather unusual form of restriction is the pro- 

32 Ore. Laws 1913, sec. 21; Remington and Ballinger's Ann. Codes 
and Stat. Wash., sec. 6604-5. 

33 Wis. Laws 1913, c. 599, sec. 2394-3. 



COMPENSATION LEGISLATION 101 

vision in the Colorado statute that injuries inten- 
tionally inflicted by self or another are not subject 
to compensation. 34 The reason for excepting the 
latter class of cases from the operation of the act is 
by no means clear, for injuries intentionally in- 
flicted by another often arise out of and are due to 
risks peculiar to an employment. For example, a 
"bouncer" in a cafe who threatens to eject an ob- 
streperous customer, and is thereupon assaulted by 
the latter, sustains injuries arising out of and in 
the course of his employment in the fullest sense of 
the word. Perhaps the Colorado statute would 
deny such an one compensation on the ground that 
he has a remedy in damages against the assaulting 
party; but the worthlessness of this claim in the 
typical case is the best reason for permitting a 
recovery of compensation from the employer whose 
business is of such a character as to subject his 
workmen to risk of assault by irresponsible third 
parties. 

A more reasonable provision is that of the Okla- 
homa statute, which denies compensation where the 
injury is caused by intention to injure self or an- 
other. 35 Self-inflicted injuries are clearly outside 

34 Colo. Laws 1915, c. 179, sec. 8. 

35 Okla. Laws 1915, c. 246, Art. II, sec. 1. 



102 WORKMEN'S COMPENSATION AND INSURANCE 

the scope of the workmen's compensation principle, 
for they are quite exceptional and in no wise re- 
sults of a risk of the employment. In most cases, 
too, injuries to the employee caused by his intention 
to injure another cannot be said to arise out of the 
employment. There may be instances in which this 
is not true ; but public policy would seem to forbid 
the award of compensation in such cases on the 
ground that it would amount to condoning an as- 
sault. However that may be, the provisions of the 
Oklahoma statute are substantially duplicated in 
the acts in force in Alaska, Delaware, Hawaii, 
Idaho, New York, Texas, and a number of other 
jurisdictions. 36 Statutes excluding injuries "in- 
tentionally self-inflicted," "by deliberate intention," 
and so forth, but making no mention of those sus- 
tained by reason of intention to injure another, 
have been adopted in Louisiana, Maryland, Minne- 
sota, New Jersey, New Mexico, and other states. 37 
The vague phrase "serious and willful miscon- 

36 Alaska Laws 1915, c. 71, sec. 4; Del. Laws 1917, c. 233, par. 
3193jj, sec. 129; Hawaii Acts 1915, No. 221, sees. 1, 3; Idaho Laws 
1917, c. 81, sec. 5; N. Y. Consol. Laws, c. 67, sec. 10; Tex. Laws 
1913, c. 179, Pt. IV, sec. 7, as amended by Laws 1917, c. 103; etc. 

37 La. Sess. Acts 1914, No. 20, sec. 28, as amended by Sess. Acts 
1916, No. 243; Md. Acts 1914, c. 800, sec. 46, as amended by Acts 
1916, c. 597; Minn. Gen. Stat. 1913, c. 84A, sec. 8203; N. J. Laws 
1911, c. 95, par. 7; New Mex. Laws 1917, c. 83, sec. 8; etc. 



COMPENSATION LEGISLATION 103 

duct" is used in Massachusetts; 38 and "willful 
misconduct" elsewhere. 39 Where injuries are due 
to breach of statutory safety regulations, or neglect 
to use guards or safety devices furnished by em- 
ployers, compensation is sometimes denied. 40 Del- 
aware refuses to extend the protection of the law 
to cases where the accident was owing to "reckless- 
ness." 41 In California, if the employee's injury is 
caused by his serious and willful misconduct, the 
compensation otherwise recoverable by him is re- 
duced one-half, subject to certain restrictions. 42 

The intoxicated workman has few friends, as is 
illustrated by provisions with regard to the forfeit- 
ure of his claims in practically all of the compensa- 
tion states. 43 Some of the laws have particularized, 
providing that only drunkenness "while on duty" 
shall prevent recovery. 44 The provision in the 

38 Mass. Acts 1911, c. 751, Pt. II, sec. 2. 

39 Mich. Acts 1912 (First Extra Session), Part II, sec. 2; So. Dak. 
Laws 1917, c. 376, sec. 7; etc. 

±o See, e. g., La. Sess. Acts 1914, No. 20, sec. 28, as amended by 
Sess. Acts 1916, No. 243; Okla. Laws 1915, c. 246, Art. II, sec. 1. 
4i Del. Laws 1917, c. 233, par. 3193jj, sec. 129. 
42Cal. Laws 1917, c. 586, sec. 6 (a) (4). 

43 See, e. g., Del. Laws 1917, c. 233, par. 3193jj, sec. 129; Kan. Laws 
1911, c. 218, sec. 1, as amended by Laws 1917, c. 226; Minn. Gen. 
Stat. 1913, c. 84A, sec. 8203; New Mex. Laws 1917, c. 83, sec. 8; Tex. 
Laws 1913, c. 179, Pt. IV, sec. 1, as amended by Laws 1917, c. 103. 

44 See, e.g., N. Y. Consol. Laws, c. 67, sec. 10; R. I. Laws 1912, c. 
831, Art. II, sec. 2. 



104 WORKMEN'S COMPENSATION AND INSURANCE 

Maine statute is a curious one ; it makes intoxication 
"without the employer's knowledge" a bar to ob- 
taining awards under the act. 45 Why the knowl- 
edge of the employer should affect his liability it is 
difficult to understand, though his consent might 
conceivably estop him from setting up his work- 
man's intoxication as a defense to the latter's 
claim. 46 

The inconsistency of American compensation 
laws with regard to the classes of injuries covered 
leaves much to be desired. But uniformity in this 
respect, though a "consummation devoutly to be 
wished," is not of the first importance. The essen- 
tial thing is substantial justice to the parties con- 
cerned ; and it is encouraging to note that the con- 
ditions of forfeiture, though so diverse in char- 
acter, are not, on the whole, unreasonable or un- 

45 Me. Laws 1915, c. 295, sec. 8. 

46 " — if the employer knew or in the exercise of ordinary care 
might have known" that the employee was intoxicated or in the habit 
of becoming so while on duty, he cannot set up the defense of the 
latter's intoxication, according to the act. This sort of estoppel is a 
curious survival of the doctrine of negligence and comparative fault; 
though the employee was in the wrong, the negligence of the em- 
ployer in not informing himself of his servant's dissolute habits, 
gives the latter an opportunity to secure his compensation neverthe- 
less. This is out of the spirit of modern compensation legislation, 
and also of the provision for forfeiture on account of drunkenness, 
which should be absolute to be effective. Perhaps the Maine legis- 
lature is trying to discourage the employment of drinking men. 



COMPENSATION LEGISLATION 105 

fair. 47 Furthermore, they have been very gener- 
ously construed in almost all jurisdictions. 48 

(4) The Compulsory Principle. Very few of 
the American compensation acts are compulsory in 
their operation with regard to private employments. 
Legislators have been afraid of raising the ghost 
of the Ives case ; in part, too, they have been guided 
by a not unpraiseworthy and very natural conserva- 
tism. They have felt that they were forcing an 
experiment upon the commonwealth, and that timid 
employers and skeptical employees should be per- 
mitted to withdraw and see how it worked out. 
Nevertheless, a conviction of the soundness of the 
principle seems to have taken hold on these eminent 
gentlemen; and they have somewhat inconsistently 
made it so hard for the employer if he does not ac- 
cept the act that he is virtually left with no choice in 
the matter. 

A typical statute of this nature is that in force in 
Massachusetts. According to Section 1 of Part I, 
employers who do not accept the act are deprived of 
the defenses of contributory negligence, negligence 
of a fellow-servant and assumption of risk. This 

47 See Willard C. Fisher in Quarterly Journal of Economics, voL 
XXX, p. 42 (November, 1915). 

48 Ibid., p. 43. 



106 WORKMEN'S COMPENSATION AND INSURANCE 

provision was clearly intended, as one writer has 
quaintly said, "to force employers to take advan- 
tage of" the provisions of the act. 49 Whatever may 
be thought of the insertion of such a rule in "elec- 
tive" statutes, its popularity as a means of gently 
coercing the employer is attested by its adoption in 
a majority of the compensation states. 50 More- 
over, in New Jersey, a similar result is reached 
where there is no mutual assent of employer and 
employee to the compensation features of the act. 51 
A most effective method of foisting compensation 
on the parties, willynilly, without technical "com- 
pulsion," is the "presumption of acceptance." This 
ingenious scheme was first tried out in New Jersey, 
and has had many imitators. It consists in con- 
clusively presuming that the employer or employee 
or both have consented to be bound by the provisions 
concerning compensation in the absence of written 
or other notice to the contrary. About half of the 
compensation states presume the acceptance of both 
employer and employee unless one or both gives no- 
tice to the opposite effect; and a considerable num- 

49 James A. Lowell in Massachusetts Law Quarterly, vol. I, p. 49 
(February, 1916). 

so See, e. g., Del. Laws 1917, c. 233, pars. 3193d (sec. 97), 3193f (sec. 
99); Pub. Acts Mich. 1912, No. 10, Pt. I, sees. 1, 2; etc., etc. 

si N. J. Laws 1911, c. 95, pars. 1-3, 5, 8-9; as amended by Laws 
1913, c. 174, and Laws 1914, c. 244. 



COMPENSATION LEGISLATION 107 

ber of other jurisdictions, while requiring an affirm- 
ative act on the part of the employer to constitute 
an election, presume that the employee has accepted 
unless he files notice to the contrary. 52 

There are a few states which have tempted Provi- 
dence in the shape of an indignant judiciary by 
passing compulsory compensation or insurance 
laws. Such are Maryland, Idaho, Utah, Ohio, and 
a few other progressive jurisdictions; the new 
United States compensation law is also compulsory 
within its field. 53 Now that the bogey of unconsti- 
tutionality is fast losing the terrors it possessed 
in the childhood of the compensation principle, we 
may look for general acceptance of compulsory 
statutes ; and the trend of opinion seems clearly in 
that direction. 54 

52 For typical statutes presuming the acceptance by the parties, 
see New Mex. Laws 1917, c. 83, sec. 4; Iowa Code, 1913 Supplement, 
sec. 2577 m (c-4), 2477 m 2; etc. For statutes presuming election 
by employee where employer has elected, see Cal. Laws 1917, c. 
586, sec. 70 (a), (b) ; Tex. Laws 1913, c. 179, Pt. I, sec. 3 a (as added 
by Laws 1917, c. 103). 

53 Md. Laws 1914, c. 800, sees. 14-15; Idaho Laws 1917, c. 81, sec. 
4; Utah Laws 1917, c. 100, sec. 52 A; Ohio Gen. Code, sees. 1465- 
1469; Act No. 267, 64th Cong, (approved Sept. 7, 1916), sec. 1. 

54 See Williams, Lewis C, in Case and Comment, vol. 22, p. 296 
(September, 1915). The elective type still prevails, however; about 
two-thirds of all American compensation laws being elective. 
Rhodes, Workmen's Compensation, page 133. Mr. Blanchard finds 
elective clauses which are no more than "a trick to evade the consti- 
tutional question . . . subversive of good legislative practice" and 



108 WORKMEN'S COMPENSATION AND INSURANCE 

(5) Nature of Awards. The introduction of 
workmen's compensation into this country was too 
hasty and precipitate to permit of the immediate 
preparation of the necessary statistical material on 
which to base economically sound schedules of 
awards. 55 Nor was the experience of Europe of 
much value in this respect ; for in Germany the in- 
surance plan is backed by an absolute government, 
so that it cannot fairly be compared with the sys- 
tem which it would be possible to establish in our 
states; and both in Germany and other European 
countries widespread confusion results from the 
variety of methods employed in publishing and 
studying accident statistics. 56 The consequence has 
been a very great and unscientific diversity among 
the provisions of our state laws. 

Some idea of the lack of unanimity among our 
states in this respect may be gathered from a perusal 
of the provisions of typical statutes. For total dis- 
ability, for instance, Rhode Island employers must 
pay their injured workmen 50% of weekly wages 

"an argument in favor of constitutional amendment." Blanchard, 
Liability and Compensation Insurance, pp. 107-108. 

ss Rubinow, I. M., in Quarterly Publications of the American Sta- 
tistical Association, vol. XIV, new series No. 109, at page 358 (March, 
1915). 

56 Rubinow (supra), page 361; Bradbury, Workmen's Compensa- 
tion (2d ed.), pages 65-66. 



COMPENSATION LEGISLATION 109 

for a period of 500 weeks, if the disability lasts so 
long; but the weekly payments are subject to a 
maximum of $10 and a minimum of $4. 57 Where 
total disability is permanent, California grants com- 
pensation at 65% of weekly earnings for 240 weeks, 
thereafter at 40% for life. 58 In Kansas, a work- 
man thus incapacitated receives 60% of wages for a 
maximum period of 8 years, weekly payments not 
to exceed $15 or be less than $6. 59 Still other states 
set the percentages at 55%, 66 2 A%, etc.; while the 
period during which compensation is to be paid, and 
the gross amounts which it must not exceed, vary 
within wide limits. 

A particularly vicious provision is that in force 
in a few states, notably Kansas, New Jersey and 
Texas, restricting compensation in certain cases 
of permanent partial disability, such as loss of an 
arm, an eye, the hearing of both ears, etc., in ac- 
cordance with a fixed schedule. 60 Thus, a New 
Jersey employee who loses his hand, is paid 50% 
of daily wages during 150 weeks; a Kansas worker 
who is made completely deaf, obtains 50% of aver- 

57 R. I. Laws 1912, c. 831, sees. 10-12. 
58Cal. Laws 1917, c. 586, sec. 9. 

69 Kan. Gen. Stat. 1915, sec. 5905, as amended by Laws 1917, c. 226. 
so Ibid.; N. J. Laws 1911, c. 95, sec. 11 (c) ; Tex. Laws 1913, c. 179, 
sees. 11, 12, as amended by Laws 1917, c. 103. 



110 WORKMEN'S COMPENSATION AND INSURANCE 

age weekly wages during 100 weeks ; and so forth. 
The absurdity of this crude method of ascertaining 
and compensating wage loss causes a smile; but it 
really presents a serious problem. It is so easy to 
dodge responsibility for accurate computations by 
bringing all classes of toilers within a blanket pro- 
vision, and the simplicity and comparative inex- 
pensiveness in operation of such a statute makes so 
strong an appeal to the economical mind, that there 
is real danger of the plan finding favor with super- 
ficial thinkers. Reflection, however, quickly dis- 
closes its faults. A very grave injustice results, 
for example, when a clerk receives the same com- 
pensation for the loss of a left arm as a carpenter. 
The former finds his earning power only slightly im- 
paired ; the latter must abandon the trade to which 
he has been trained and seek an entirely new field 
of endeavor. Again, a musician and a stoker both 
become deaf due to accidental injury arising out of 
and in the course of the employment. One sees 
his entire means of livelihood swept away ; the other 
may continue in his occupation. 

Any graduated scale of awards must take into 
account the different degrees of injury — temporary 
partial disability, temporary total disability, perma- 



COMPENSATION LEGISLATION 111 

nent partial disability, permanent total disability^ 
and death. Where a workman is slightly incapaci- 
tated for a limited time, by an accident of his em- 
ployment, enlightened public policy dictates that his 
wage loss should be made up to him in part, great 
care being exercised to avoid awards so lavish as to 
encourage malingering. Such cases, however, are 
the least pressing, and most of the compensation 
acts are generous enough in this regard. It is when 
we come to injuries which, while partial, are perma- 
nent, and total disability, either temporary or per- 
manent, that the problems arise. Wage loss here 
is serious, and affects not only the workman and 
his family, but the whole community, which is at 
the same time deprived of his services and in danger 
of being saddled with his support. 

The search for a common principle to govern 
these cases leads to the following conclusions : ( 1 ) 
In death cases the question of prime importance is 
the number of dependents of the deceased and the 
extent of their dependency. If there are no de- 
pendents, there seems no social necessity for com- 
pensation other than that needed to cover medical 
treatment and burial; but where the deceased was 
the chief or sole support of a family, it is impera- 



112 WORKMEN'S COMPENSATION AND INSURANCE 

tive both from the point of view of common human- 
ity and that of community interest that the surviv- 
ing dependents receive substantial assistance during 
the continuance of dependency . 60a (2) In all cases 
of injury not resulting in death, awards should be 
so graduated as to take into consideration both loss 
of earning power and the number of dependents 
of the person thus incapacitated. Especially is this 
true where permanent total disability results. The 
failure to apply this double standard is one of the 
chief defects in American compensation legislation, 
most of our statutes confining their consideration 
to wage loss alone. (3) The percentage of weekly 
wages on which computations are based should be 
more elastic to accommodate itself to varying cir- 
cumstances. Thus, an unmarried employee tem- 
porarily disabled might be entitled to receive only 
50% of weekly wages, with a proper minimum, 
while his comrade with a large family should be 
granted 75%. Workmen's compensation is pri- 
marily a social problem, and uniformity of awards 
should not be adhered to blindly, when such action 
would result in semi-starvation in one family, and 
comparative superfluity in another. For the nor- 
mal case, however, 66% % of weekly wages may be 

eoa24 Journal of Political Economy, pp. 951-952 (December, 1916). 



COMPENSATION LEGISLATION 113 

said to be a fair percentage; 50% is too low, and 
more might encourage malingering. 6013 

The principles outlined above, however, have been 
slow in impressing themselves on the minds of our 
legislators. Only a few states gauge the percent- 
age of weekly wages payable as compensation by 
the number of dependents of the employee; 61 many 
jurisdictions have provided that in the case of death 
no more than a certain gross sum ($3,500 in Kan- 
sas; 62 $4,000 in Utah; 63 etc.) shall be paid to sur- 
viving relatives, instead of making awards co-ex- 
tensive with the continuance of dependency; and 
the provisions limiting the maximum weekly amount 
which may be disbursed to one injured workman un- 
der the law (in some states as low as $10) 64 stand 
in the way of any liberal application of the compen- 
sation principle. 

60b Blanchard, Liability and Compensation Insurance, pp. 127-128. 

6i And this only in death cases. The New York provisions are 
especially interesting. See N. Y. Consol. Laws, c. 67, sec. 16, as 
amended by Laws 1916, c. 622. 

62 Kan. Gen. Stat. 1915, sec. 5905, as amended by Laws 1917, c. 226. 

63 Utah Laws 1917, c. 100, sec. 76. 

6* E. g., N. J. Laws 1911, c. 95, par. 12. Limitations of compensa- 
tion payments by a maximum weekly amount are unsound in prin- 
ciple ; and the tendency is to remove them altogether. Rhodes, Work- 
men's Compensation, p. 147. The practice of limiting either the 
aggregate amount of such payments or the number of weeks during 
which payment should be made, should be "condemned without re- 
serve." Blanchard, Liability and Compensation Insurance, p. 128. 



114 WORKMEN'S COMPENSATION AND INSURANCE 

One feature common to nearly all American com- 
pensation acts is worthy of hearty commendation. 
This is the practice of making awards in small 
periodical payments instead of in a lump sum. In 
this the compensation system differs from, and has 
great practical advantages over, the common law; 
for the small periodical payments put less strain 
on the employer and his insurance carrier, are better 
for the workmen in that they offer less temptation 
to squandering and furnish a modest but sufficient 
subsistence over an extended period, and are to the 
advantage of the community in that there is less 
likelihood of their being diverted from their pur- 
pose of obviating the social problem of poverty, to 
investment and speculation. The rule is not iron- 
bound, however, and most states permit commuta- 
tion of periodical payments to a lump sum in cases 
where under special circumstances this course seems 
advisable. 65 

(6) The Waiting Period. Most of the Ameri- 
can compensation laws provide for an interval of 
time between the commencement of the disability 
and the beginning of payments, set variously at 

65 E. g., Mass. Acts 1911, c» 751, sec. 22, as amended by Acts 1914, 
c. 708; Cal. Laws 1917, c. 586, sec. 28; Ohio Acts 1913, sec. 40, as. 
amended by Acts 1917, House Bill 506. 



COMPENSATION LEGISLATION 115 

from one to three weeks. 66 The purpose of such a 
provision is twofold — to relieve the administration 
of the act from the burden and confusion of pay- 
ments for trifling injuries, and to lessen the tempta- 
tion to malingering on the part of the employee. 
But workmen cannot see the reason for the waiting 
period ; 67 and where a laborer is very poorly paid 
and living from hand to mouth, it may be a real in- 
justice to make him wait for his compensation. 

Waiting periods may be said to be of two kinds : 
those which merely postpone compensation, which 
at the expiration of the period (if the employee is 
still disabled) is computed from the date of injury ; 
and those which constitute a real gap for which 
no compensation is recoverable. The latter type 
is very objectionable, to my mind; but it is easily 
the more common in this country, being found in the 
statutes of most of the compensation states. 68 The 
other kind of waiting period, which merely post- 
66 Tex. Laws 1913, c. 179, Pt. I, sec. 6, as amended by Laws 1917, 
c. 103 (one week) ; Cal. Laws 1917, c. 586, sec. 9 (b) (1) (ten days) ; 
Iowa Code, 1913 Supplement, sec. 2477-m 9 (g), as amended by Laws 
1917, c. 270 (two weeks) ; New Mex. Laws 1917, c. 83, sec. 18 (three 
weeks). 

67 American Labor Legislation Review, vol. V, at page 76 (March, 
1915). 

esE.g., Minn. Gen. Stat. 1913, sec. 8211, as amended by Laws 1915, 
c. 209, and Laws 1917, c. 302; New Mex. Laws 1917, c. 83, sec. 18; 
etc., etc. 



116 WORKMEN'S COMPENSATION AND INSURANCE 

pones awards for the probationary time until the 
injury is established as serious enough to merit com- 
pensation, and which may be defended as tending 
to simplify the administration of the acts, has been 
established in several states. 69 In Washington, 
Oregon and Porto Rico there is no waiting pe- 
riod. 70 

The tendency as illustrated by recent legislation 
seems to be towards adopting a standard waiting 
period of one week, rather than towards abolishing 
it altogether. 71 On the other hand, the New Mex- 
ico act of 1917 establishes a waiting period of 
three weeks — the maximum in the United States. 72 
The author's feeling is that this feature of com- 
pensation legislation should be done away with en- 

69 The form which these statutes generally take is to have a wait- 
ing period for ordinary injuries, with the proviso that if the incapac- 
ity extends for more than a certain fixed period, compensation is 
payable from the date of injury. Some of the laws, with the periods 
beyond which incapacity must extend to render nugatory the waiting 
period, are: N. Y. Laws 1913, c. 816, sec. 12, as amended by Laws 
1917, c. 705 (49 days); So. Dak. Laws 1917, c. 376, sec. 24 b (8 
weeks); Mich. Pub. Acts, First Extra Session, 1912, No. 10, Pt. II, 
sec. 3 (8 weeks) ; R. I. Laws 1912, c. 831, Art. II, sec. 4, as amended 
by Laws 1917, c. 1534 (4 weeks). 

70 Remington and Ballinger's Ann. Codes and Stats. Wash., sees. 
6604-5 d (but no compensation is payable unless loss of earning 
power exceeds 5%); Oregon Laws 1913, c. 112 (as amended by Laws 
1915, c. 271), sec. 21 b, c, d; Porto Rico Acts 1916, No. 19. 

7i This is the conclusion reached by Dr. Rubinow in an article in 
26 Journal of Pol. Economy, p. 273 (March, 1918). 
72 New Mex. Laws 1917, c. 83, sec. 18. 



COMPENSATION LEGISLATION 117 

tirely, or, if retained, should be set at three days or 
some similarly low mark. 73 

(7) Medical and Surgical Aid. Compensation 
awards are intended to take the place in some de- 
gree of wages, and to defray the ordinary expenses 
of the injured workman and his family during the 
enforced hiatus in his productive activity. It is 
obvious, however, that this fails entirely to cover 
one class of very necessary expenditures — the medi- 
cal and surgical treatment, the hospital charges, 
and the countless incidental calls on the purse, which 
the injury entails. To very poor workmen, and 
families living on a margin, "doctors' bills" come as 
a crushing blow, and the utter impossibility of pay- 
ing them out of the pittance reserved for the abso- 
lute essentials of every-day life, is manifest. Espe- 
cially is this true in states where "waiting periods" 
immediately follow the injury, and no compensa- 
tion is forthcoming at the very time when the in- 
jured man most needs the costly attention and care 
of a physician. The neglect and consequent en- 
dangering of life and retarding of recovery which 
would be the inevitable outcome if no special pro- 
vision were made for these cases, present a serious 

73 The waiting period under the Federal compensation law is 3 
days. Act No. 267, 64th Cong. (1915-1916), sec. 2. Four days is the 
length advocated by a recent writer. McCanna, The New Era, p. 102. 



118 WORKMEN'S COMPENSATION AND INSURANCE 

social problem; for anything that tends to prolong 
the laborer's period of enforced idleness causes an 
additional drain on the resources of the commun- 
ity. To meet this condition, nearly all compensa- 
tion states have made some provision for medical 
and surgical aid for an injured employee. 74 

In most jurisdictions, "reasonable" medical and 
surgical aid, including hospital treatment, the serv- 
ices of nurses, and such crutches, apparatus, and 
medical and surgical supplies as may be necessary, 
are required to be furnished by the employer or 
responsible insurance carrier. In almost all states, 
however, this generous scheme is subject to limita- 
tions, both as to time and amount. In Delaware 
only $25 may be spent for this purpose, and treat- 
ment must not extend over a period greater than 
two weeks. 75 New Jersey is scarcely more gener- 
ous, having the same restriction as to time, and a 
maximum disbursement of $50. 76 South Dakota 

T±E.g., Iowa Code (1913 Supplement), sec. 2477-m 9 (b), as 
amended by Laws 1917, c. 270; Del. Laws 1917, c. 233, sec. 101; Utah 
Laws 1917, c. 100, sec. 86; Kan. Gen. Stat. 1915, sec. 5905, as 
amended by Laws 1917, c. 226; Vt. Laws 1915, c. 164, sec. 14, as 
amended by Laws 1917, c. 173. There is no provision for medical or 
surgical aid in Arizona, Washington, or Wyoming. Blanchard, Lia- 
bility and Compensation Insurance, p. 126. 

75 Del. Laws 1917, c. 233. 

76 N. J. Laws 1911, c. 95, par. 14, as amended by Laws 1913, c. 
174, and Laws 1914, c. 244. 



COMPENSATION LEGISLATION 119 

and Iowa set a maximum of four weeks and $100 ; 77 
Kansas, 50 days and $150 ; 78 Utah has no time 
limitation and permits as much as $200 to be spent 
for this purpose. 79 Texas has wisely set no limit 
on the amount which may be expended, and while 
providing that in general the injured workman shall 
not be reimbursed for more than two weeks of treat- 
ment, allows some latitude where total disability re- 
sults. 80 California and Idaho are even more lib- 
eral, and, recognizing that each case must be de- 
cided on its own merits and in the light of its 
peculiar circumstances, provide for such treatment 
as is reasonably required for a reasonable time, with 
no further restrictions. 81 

"One of the objects of compensation is the con- 
servation of human resources," remarks a recent 
writer; 82 and if this is conceded (as it must be) 
adequate provision for medical and surgical aid will 
be seen to be a very essential part of the great social 
scheme of which this modern legislation is the ex- 

77 So. Dak. Laws 1917, c 376, sec. 24 a; Iowa Code (1913 Supple- 
ment), sec. 2477-m 9 (b), as amended by Laws 1917, c. 270. 

78 Kan. Gen. Stat. 1915, sec. 5905, as amended by Laws 1917, c. 226. 
7» Utah Laws 1917, c. 100. 

so Tex. Laws 1913, c. 179, sees. 7a, 7b, 12e, 12f, as amended by Laws 
1917, c. 103. 

si Cal. Laws 1917, c. 586, sees. 9 a, 10; Idaho Laws 1917, c. 81, sees. 
16-17. 

82 Rhodes, Workmen's Compensation, page 144. 



120 WORKMEN'S COMPENSATION AND INSURANCE 

pression. It is of the first importance that every 
injured employee should receive immediate and ef- 
ficient care; for if he does not, the community, the 
taxpayer, the consumer, in the end pay more, and 
the world is poorer by the labor which the unfortu- 
nate victim might have been enabled to resume. 
To the law-makers, therefore, we recommend the 
passage of the broadest sort of statutes, vesting 
authority in proper bodies to determine the reason- 
able expenditure necessary to bring the injured 
workman back to the highest possible efficiency, and 
to decree the payment of the same. Stingy allow- 
ances represent a penny-wise, pound-foolish policy, 
as indefensible on economic grounds as it is from 
the humanitarian standpoint. 

Another question of importance in this connec- 
tion is whether the selection of a physician should be 
left with the employer, the employee, or some other 
agency. A recent writer has urged with some elo- 
quence that the employee should exercise the choice 
in this matter, since his confidence in his physician 
may be an important element in hastening his recov- 
ery; though this same author concedes that the ju- 
dicial tendency, in the absence of express provision 
in the statutes, has been to leave with the employer 
the discretion in selecting the medical attendant, 



COMPENSATION LEGISLATION 121 

subject to the limitation of reasonableness. 82a Both 
plans have disadvantages. Where an impartial 
commission administers the statute, it would seem 
that that body might well be empowered to decide 
in this matter as in others. 

(8) Methods of Administration, The difficult 
problem of securing a competent body to administer 
the compensation laws has been met by the states in 
various ways. In New Jersey, the local Court of 
Common Pleas hears and determines disputes aris- 
ing under the act; from its decision there is an ap- 
peal to the state Supreme Court, but only on ques- 
tions of law. 83 This system has been severely criti- 
cized, and the adaptability of the law courts to such 
purposes questioned. In most states, such matters 
as are susceptible of agreement or arbitration will 
be composed, if possible, in that manner; but if co- 
operative means fail, a hearing before the state In- 
dustrial Commission or similar body is resorted to. 
The right to appeal to the highest court of the state 
is commonly granted. 

As litigation, with its inevitable delays and com- 
plications, was one of the chief and recognized de- 
fects of the common law system, one would natu- 

szaMcCanna, The New Era, pp. 86-87. 

83 N. J. Laws 1911, c. 95, pars. 18, 20, as amended by Laws 1916 s 
c. 54. 



122 WORKMEN'S COMPENSATION AND INSURANCE 

rally expect to find legislators anxious to take com- 
pensation cases out of the courts ; and the failure to 
do so in several states is a disappointing feature. 
However, as has been pointed out by a recent 
writer, 84 laws which leave the settlement of compen- 
sation suits to the courts generally endeavor to elim- 
inate delay by providing that cases be decided 
summarily and with the least possible indulgence in 
legal technicalities. For example, in Minnesota 
disputed claims may be submitted by either party 
to a judge of the District Court, who hears the 
case and settles it in a summary manner, appeal 
from such judgment to the Supreme Court being 
permitted on questions of law only. 85 In New Jer- 
sey, if no agreement is filed within 21 days, the 
facts with regard to the claim are certified by the 
Workmen's Compensation Aid Bureau to the 
Judge of the Court of Common Pleas, who decides 
both law and facts; his decision is subject to re- 
view on questions of law by the Supreme Court. 86 
New Mexico, however, utilizes the judicial machin- 
ery just as in ordinary civil cases, trial being had, 
on filing the claim, before the District Court, in case 

s* Rhodes, Workmen's Compensation, p. 181. 

85 Minn. Gen. Stat. 1913, sees. 8216, 8219, 8225, as amended by 
Laws 1915, c. 209. 

se See footnote 83, supra. 



COMPENSATION LEGISLATION 123 

of non-payment of any claim of which notice has 
been given to the employer, either party being en- 
titled to demand a jury trial, and the final order 
being reviewable by the Supreme Court upon ap- 
peal or writ of error in the same manner as other 
cases. 87 

The court system of administration has one dis- 
advantage which is fatal to its efficiency. It thrusts 
upon judges who are selected, and rightly selected, 
mainly because of their expert knowledge of the 
law, the practical working out of a system which 
involves few legal principles but requires for its 
proper handling a close familiarity with the indus- 
trial field and problems of labor. A magistrate 
who copes with the interpretation of contracts, the 
title to realty, the law of assault, every day, has 
neither time nor inclination to master the question 
of how far a glass-blower is disabled for profitable 
employment by the loss of his hearing, or what de- 
gree of dependency will justify the minimum award 
to dependents, especially when the compensation 
cases on the court docket are relatively few. An 
Industrial Accident Commissioner, or a special 
Board or other tribunal, endowed with special 
knowledge and devoting its entire time to compen- 

87 New Mex. Laws 1917, c. 83, sees. 13, 15, 24. 



124 WORKMEN'S COMPENSATION AND INSURANCE 

sation work, would be immeasurably more efficient. 
This conclusion has evidently been pretty generally 
attained, as most states have provided for adminis- 
tration by such an individual or body. 88 

Some of the typical statutory provisions may 
profitably be reviewed here. In Massachusetts, 
employer and employed may settle the claim by 
agreement, subject to the approval of the Indus- 
trial Accident Board; in case of dispute either party 
may notify the Board, which must assign the case 
for hearing by a member thereof; and an appeal 
from the Board's order or decision may be taken 
within ten days after notice of filing. 89 In Iowa, 
the Industrial Commissioner may pass on agree- 
ments; or an arbitration committee appointed by 
the parties and the Commissioner may decide the 

88 E. g., Mass. Acts 1911, c. 751, Pt. Ill, as amended by Acts 1912, 
c. 571, Acts 1913, c. 48, 448, 746, Acts 1914, c. 708, Acts 1915, c. 
132, 275, Acts 1916, c. 72, Acts 1917, c. 297 (Industrial Accident 
Board); Cal. Laws 1917, c. 586, sec. 3 (1), also Laws 1913, c. 176, 
sees. 3-11 (Industrial Accident Commission); R. I. Laws 1912, c. 
831, Art. VI, sec. 6, as added by Laws 1915, c. 1268 (commissioner 
of industrial statistics) ; Kan. Gen. Stat. 1915, sees. 5933-5937 (su- 
perintendent of insurance) ; Porto Rico Acts 1916, No. 19, sec. 10, as 
amended by 1917 act approved April 12, 1917 (Workmen's Relief 
Commission). For arguments in favor of administration by a com- 
mission or industrial accident board, see Blanchard, Liability and 
Compensation Insurance, pp. 136-137; McCanna, The New Era, 
p. 102. 

89 See sees. 4-11 of Pt. Ill of Mass. act, as cited in footnote 88, 
supra; also Mass. Acts 1915, c. 132. 



COMPENSATION LEGISLATION 125 

claim, subject to review by the Commissioner, from 
whose determination appeals on certain specified 
grounds only are allowed. 90 In Utah, the Indus- 
trial Commission has full power to hear and deter- 
mine all questions pertaining to payment of com- 
pensation; if it denies a claim on a ground going 
to the basis of the claimant's right, appeal may be 
taken in 30 days to the District Court with privilege 
of jury trial; and a further appeal to the Supreme 
Court is provided for. 91 Idaho encourages settle- 
ment by agreement, sub j ect to approval by the In- 
dustrial Accident Board ; in case of dispute, either 
party may apply for appointment of an arbitra- 
tion committee to be composed of three members 
representing both parties and the Board, whose de- 
cision is subject to review by the full Board upon 
application for such within 30 days, or in case no 
award is made within 30 days; and from thence 
appeal is to the District Court on questions of law 
only. 92 

It is probably not desirable that every compen- 
sation case should come up for a full hearing, even 
before a board or commission specially trained and 

so Iowa Code (1913 Supplement), sees. 2477-m 25-33, as amended 
by Laws 1917, c. 270. 

si Utah Laws 1917, c. 100, sec. 87. 

92 Idaho Laws 1917, c. 81, sees. 49-55, 57, 60. 



126 WORKMEN'S COMPENSATION AND INSURANCE 

dedicated to that sort of work. Such a proceeding 
partakes too strongly of the nature of a court trial, 
with its cumbrous machinery and inevitable delay. 
Where an agreement can be reached between the 
claimant and the employer, affidavits reciting that 
fact, and the circumstances of the accident, extent 
of the injury, etc., should be sent up to the admin- 
istrative board for approval; if satisfactory and 
strictly in accordance with law, the settlement out 
of court should be approved, and the incident ended. 
If ground for reversal appears on the face of the 
case, a hearing should be ordered and the question 
tried in a summary manner by the board, just as 
if a dispute were involved; for it is essential to the 
proper operation of workmen's compensation laws 
that employees be not permitted to sign away their 
legal rights thereunder, no matter how willing they 
may be to do so. 

The ideal law would also provide for an appeal 
to the highest or intermediate court of the state; 
but the policy adopted in many jurisdictions of con- 
sidering the findings of fact of the administrative 
board final, and confining appeals to questions of 
law, seems eminently sound. 

(9) Extraterritorial Effect. One of the minor 
problems, but a very practical one, with which those 



COMPENSATION LEGISLATION 127 

charged with the administration of compensation 
laws have to deal, is that of extraterritorial effect. 

A typical case is this: the X Company, in 

New Jersey, employs B , a salesman, to can- 
vass that state and certain towns in Pennsylvania. 
The salesman sustains an injury arising out of and 
in the course of his employment in Pennsylvania. 
Under what law, if any, is he entitled to compensa- 
tion? 

The answer to this problem is that B would 

be compensated according to the law of New Jer- 
sey ; for the contract of hiring was made there, and 
New Jersey is one of the jurisdictions applying the 
lex loci contractus, or law of the place where the 
contract was made, in such cases. 93 Pennsylvania 
has no jurisdiction of the employer or of the con- 
tract of employment in the supposititious case, but 
the injury was incurred within its boundaries; so it 
is conceivable that if the claim was originally made 
under the Pennsylvania act, compensation might be 
granted in that state, although a prior recovery of 
compensation in New Jersey would operate as a 
bar. 94 

A great many compensation laws have no provi- 

93 Rounsaville v. Central R. Co. (1915), 87 N. J. Law 371. 

94 31 Harvard Law Review, pp. 620-628 (February, 1918). 



128 WORKMEN'S COMPENSATION AND INSURANCE 

sion at all for extraterritorial effect. 95 In the ab- 
sence of such the courts sometimes give full force 
and operation to the acts (in proper cases) outside 
the state of origin, as has been done by the highest 
tribunal in New York. 96 Where the legislature has 
undertaken to regulate the matter, it is generally 
provided that compensation may be had when the 
employee was hired in the state, even if the injury 
occurred beyond its boundaries. 97 

Extraterritorial effect does not present a prob- 
lem of very great moment. It is important, of 
course, that some sure method of procuring com- 
pensation be provided in cases of possible conflict of 
jurisdiction; but as a practical matter judicial con- 
struction, in the absence of enabling legislation, has 
generally secured the plaintiff's rights. Double 
recoveries are rendered impossible by the holding of 
the courts that when an injured employee accepts 
compensation under the law of the state where the 
contract was made, he automatically waives any 

85 Rhodes, Workmen's Compensation, page 151. 

96 Valentine v. Smith, 168 App. Div. 403, affirmed in 216 N. Y. 763. 

Q?E.g., Idaho Laws 1917, c. 81, sec. 62; Utah Laws 1917, c. 100, 
sec. 65; Texas Laws 1913, c. 179, Pt. I, sec. 19, as added by Laws 
1917, c. 103; Nev. Laws 1913, c. Ill, sec. 41, as amended by Laws 
1915, c. 190. But the Pennsylvania act does not apply to any acci- 
dent occurring outside of the Commonwealth, irrespective of the place 
where the contract of hiring was made. Pa. Laws 1915, Act No. 338, 
•«ec. 1. 



COMPENSATION LEGISLATION 129 

other rights against his employer. 98 For the rare 
case where suit is brought to enforce the compensa- 
tion law of another state with regard to injuries 
received in the latter jurisdiction, provision is sel- 
dom made, though Idaho permits recovery in such 
cases when the claimant's rights can reasonably be 
determined and dealt with by the local Board and 
Courts." In almost all such cases, however, the 
more normal procedure of seeking justice in the 
state of hiring is feasible and should be encouraged. 
(10) Accident Prevention. It is true that the 
theory of workmen's compensation rests on the as- 
sumption that the expense of industrial accidents is 
part of the cost of the product ; but it is a mistake 
to presume that passive acceptance of conditions is 
therefore included in the compensation program. 
Indeed, the opposite is the fact. So far from tak- 
ing the great number of accidents in modern in- 
dustry for granted, well-considered compensation 
laws make either direct provision for accident pre- 
vention through the rule-making power given to ad- 

98 Rhodes, Workmen's Compensation, page 152. But where one 
state is under the old employers' liability system, and the other has a 
compensation act, and where compulsory acts are involved, the law as 
to double recoveries is by no means as simple and equitable as Mr. 
Rhodes intimates. 31 Harvard Law Review 619-636 (February, 
1918). 

99 Idaho Laws 1917, c. 81, sec. 62. 



130 WORKMEN'S COMPENSATION AND INSURANCE 

ministrative boards, or indirectly encourage the use 
of safety appliances. The very fact of compensa- 
tion itself is an encouragement to accident preven- 
tion; for when employers are forced to assume the 
financial burden of the injuries springing from the 
accidents of industry, their enthusiasm for the 
elimination of such injuries is naturally increased. 
A few instances of explicit statutory provisions 
regarding accident prevention, taken at random 
from the mass of compensation laws, will serve to 
illustrate the methods employed to stimulate inter- 
est in the humanitarian side of this labor problem. 
In Delaware the Industrial Accident Board is 
charged with the duty of inquiring into causes and 
results of industrial accidents, and studying the 
most advanced methods of safeguarding against 
them. 100 In California, the employer must do 
everything reasonably necessary to protect life and 
the safety of employees; and the Industrial Acci- 
dent Commission is empowered to prescribe rules, 
establish standards, require use of safeguards, etc., 
for accident prevention, and impose penalties to 
enforce the same. 101 Massachusetts compels the 
Directors of the Employees' Insurance Association 

100 Del. Laws 1917, c. 233, sec. 116. 

ioi Cal. Laws 1917, c. 586, sees. 34-35, also Laws 1913, c. 177, sec. 18. 



COMPENSATION LEGISLATION 131 

to make and enforce reasonable regulations for the 
prevention of accidents on the premises of subscrib- 
ers ; and gives to the State Board of Labor and the 
Industrial Accident Board jointly, the right to 
adopt and enforce regulations for prevention both 
of accidents and industrial diseases. 102 

Statistics available from several compensation 
states show that about 25% of industrial accidents 
are due to mechanical causes; and it has also been 
established that the severity of accidents mechan- 
ical in their origin is much greater than the severity 
of those due to the thoughtlessness and negligence 
of the worker. 103 The fresh impetus given to acci- 
dent prevention by the introduction of workmen's 
compensation resulted in a marked reduction of 
non-mechanical accidents, due to safety organiza- 
tion and educational methods. A great deal, how- 
ever, remains to be done in the shape of "mechan- 
ical safeguarding" ; and proper attention to the de- 
sign and location of buildings, the arrangement of 
transportation facilities, the means of access to 
safety points, proper lighting, and the guarding 
and replacement of dangerous machines, will con- 

102 Mass. Acts 1911, c. 751, Pt. IV, sec. 18, also Laws 1913, c. 813. 

103 Monthly Review of U. S. Bureau of Labor Statistics, vol. V, 
p. 112 (October, 1917). 



132 WORKMEN'S COMPENSATION AND INSURANCE 

tribute greatly towards the elimination of purely 
mechanical hazards. 104 

One of the most obvious methods of inducing 
an employer to bestir himself in accident preven- 
tion — raising his insurance rates when he shows a 
reluctance to employ safety devices — has been 
availed of surprisingly little in American compen- 
sation systems. Private insurance companies 
have achieved wonderful results by this simple 
means; yet in statute after statute legislators have 
clung to a rigid classification of rates according 
to industries, and have assessed the employer who 
lavishes time and money on safety appliances on 
the same basis as the one who grudges the irreduci- 
ble minimum of effort along that line. 105 

It is true that the problem of finding an agency 
to which could be left with safety the delicate task 
of altering the standard rate of insurance in accord- 
ance with the insured's efforts along the line of acci- 
dent prevention, is a perplexing one. Private in- 

104 ibid., p. 113 . 

105 Washington appeals to the pocket of the employer in a very 
practical way by providing that if he does not obey a statute or order 
of the commission as to safety devices or regulations, he is subject to 
a penalty of 50% of the compensation awarded, this amount to be 
paid into the accident fund. If the injured employee is responsible 
for the removal of a safeguard his compensation is reduced by 10%. 
Blanchard, Liability and Compensation Insurance, p. 139. 



COMPENSATION LEGISLATION 133 

surance adjusters and actuaries, however, exercise 
these functions to-day with distinct success; and it 
seems not unreasonable to suppose that a State 
Insurance Commissioner or Industrial Accident 
Board could be intrusted with this difficult work 
without much risk of unfair discrimination, and 
with a salutary effect on dangerous industrial con- 
ditions. 



CHAPTER V 

INSURANCE FEATURES 

The success of any system of workmen's compensa- 
tion must rest, in the last analysis, on insurance. 1 
The individual employer cannot afford to take the 
risk of being suddenly called on to pay large sums 
in the form of awards to injured workmen; such a 
demand, caused by an accident in which many are 
injured, and coming at a time when ready money is 
scarce, might conceivably bankrupt even a large 
concern. A somewhat similar situation existed, 
to be sure, in the days of common law employers' 
liability; but several factors tended then to make 
the need of insurance less pressing. For one thing, 
the question of liability was tried in a court of law, 
and the employer, better able to pay for expert 
legal advice than his opponent, and armed with his 
special defenses — assumption of risk, contributory 
negligence, and fellow-servant rule — was often able 

i See note by the present author on "State Insurance under Work- 
men's Compensation Acts" in 17 Columbia Law Review, pp. 75-78 
(January, 1917) ; also Blanchard, Liability and Compensation Insur- 
ance, p. 207; and 9 Maine Law Review, p. 199 (May, 1916). 

134 



INSURANCE FEATURES 135 

to evade responsibility entirely. Moreover, dam- 
ages, when awarded, being dependent on the whims 
of a jury, were such an uncertain quantity as to 
render insurance against them highly speculative, 
with the result that premiums were often prohibi- 
tive. 

Workmen's compensation laws have greatly re- 
duced the legal uncertainties inherent in the old sys- 
tem, and have left only the normal risk — that of 
the occurrence of the injury itself — for insurers 
to contend with. The shrewd employer of to-day, 
forced, as he is, to pay compensation practically 
without regard to the question of negligence, faces 
a problem somewhat like this: "My factory em- 
ploys so many hands; even with the utmost care, 
explosions and other accidents may occur, and may 
injure a great number of my men. Under such 
circumstances, the most conclusive proof that I have 
been blameless will avail me not at all, and I will 
be forced to pay compensation according to a defi- 
nite schedule to all my injured employees. Shall I 
take my chances, carry my own risk, or insure else- 
where?" It is safe to say that nine out of ten such 
employers would be in the market for insurance 
almost before they had finished formulating the 
above proposition. 



136 WORKMEN'S COMPENSATION AND INSURANCE 

Heretofore we have assumed that it is optional 
with employers whether they shall insure or merely 
stand ready to pay compensation when the acci- 
dent occurs. But in a large and increasing number 
of jurisdictions, this option no longer remains. 
The requirements vary: thus, in New York, Utah, 
Maryland, Texas, and a number of other states, 
the employer is at liberty to choose between insur- 
ance in stock companies, mutual associations, or a 
state-managed fund or central association; and 
furthermore, in the three first-mentioned states 
sufficient proof of financial responsibility will be 
accepted in lieu of any of these. 2 In other juris- 
dictions, there is monopolistic or semi-monopolistic 
state insurance ; while still others maintain no state 
fund at all, but demand insurance by the employer 
nevertheless. 3 

The danger of a workmen's compensation act 
with no provision whatsoever for insurance or secur- 
ity has already been indicated. Sudden large de- 
mands on the employer may ruin him; and as the 
workman's claim under such an act is a personal 

2N. Y. Consol. Laws, c. 67, sec. 50; Utah Laws 1917, c. 100, sec. 
53; Md. Laws 1914, c. 800, sees. 14-15; Tex. Laws 1913, c. 179, Part 
III, Part IV, sec. 2, as amended by Tex. Laws 1917, c. 103. 

s See texts of laws, also Digests published by Workmen's Com- 
pensation Publicity Bureau. 



INSURANCE FEATURES 137 

one against the employer, it follows that the lat- 
ter's financial collapse spells disaster for the injured 
man as well. Moreover, a state of affairs which of- 
fers such a temptation to speculation by employers 
on the probability of accidents is not conducive to 
the financial stability of the industrial world. The 
following statement by a leading English writer 
explains this and other weaknesses of the English 
or "straight compensation" system: 

"British law now recognizes, for practically the 
whole of the employed population, that the em- 
ployer is liable to compensate the employed for loss 
of earning power through accident incurred by rea- 
son of his employment and to compensate the de- 
pendents of a workman for the loss of his support 
if he dies as the result of an accident during his 
employment. Our law establishes employers' 
liability according to a certain schedule, and leaves 
it at that. For the rest, the employer has to face 
his tremendous task as best he can, and the work- 
man has to get his compensation out of the em- 
ployer if he can. The State may thus wash its 
hands of results, but certain results are inevitable. 
The employers find it necessary to insure them- 
selves against a great liability imposed upon them 
by the wisdom of the Legislature. They insure 



138 WORKMEN'S COMPENSATION AND INSURANCE 

their workmen with various insurance companies, 
and the consequence is that in effect the injured 
workman, or the dependents of a deceased work- 
man, have to deal not with the employer liable under 
the law, but an insurance company which has un- 
derwritten the employer's liability. The insurance 
company, not being a philanthropic institution, is 
out to make profits upon the State-imposed liabil- 
ity. It makes those profits on the one hand by 
charging the employer as much as possible, and on 
the other hand by paying the workman as little as 
possible, selling its insurance in the dearest market 
and buying its workmen's claims in the cheapest, 
thus fulfilling the law, if not the prophets. There 
are only 2,000,000 Trade Unionists in the United 
Kingdom, and but a small proportion of our work- 
people are in a position to get advice as to how 
to proceed under the law. The average workman 
would as soon think of employing a solicitor as of 
flying to the moon, and the contest between the 
uninformed workman and the insurance company, 
expert in resisting claims, is absurdly unequal. 
Every year tens of thousands of claims are whittled 
down or inadequately settled for small, but tempt- 
ing, lump sums. Moreover, our law puts the onus 
upon the workman to show that he cannot earn 



INSURANCE FEATURES 139 

wages, and the man or woman who loses an eye is 
hard put to it to get a penn'orth of compensa- 
tion. . . . 

"It appears to me that the German method of 
dealing with employers' liability is infinitely supe- 
rior to ours. Germany compels every employer to 
insure his workpeople at his own cost in a mutual 
insurance fund, the employer thus merging his risk 
with the other employers in his trade. What is the 
result; or rather, what are the results? First, 
the employer obtains his insurance at cost price, 
there being no insurance middleman to make a profit 
out of dire necessity. Second, the employee is as- 
sured of compensation, for the insurance institute 
is under the control of the Imperial Insurance Of- 
fice. Further, a specific injury, such as the loss 
of a hand or of an eye, is assured on a specific com- 
pensation. Third, and last, but not least, it be- 
comes the direct and the obvious interest of the em- 
ployers in each trade to keep down the mutual 
premiums, and they can only do that by making 
their mills and factories safer working places. If 
a trade hits on a new safety appliance, it means a 
lower insurance premium for the trade." 4 

In the present stage of thought, the main thesis 

* Money, Insurance vs. Poverty, pp. 52-54. 



140 WORKMEN'S COMPENSATION AND INSURANCE 

of the foregoing extract — that "pure" workmen's 
compensation, without any provision for insurance, 
is fatally defective — is regarded as axiomatic. In 
the few of our states which still cling to the old plan, 
there are increasing protests among the enlightened. 
But there is a real clash over the methods of insur- 
ing, the agitators being mostly divided between two 
camps — the advocates of compulsory state insur- 
ance or compulsory insurance in mutual associa- 
tions under close governmental supervision on the 
one hand, and the representatives of the private in- 
surance companies who want competitive bidding 
for compensation business on the other. 

To the private insurance companies the matter is 
naturally one of immense importance, and an 
enormous amount of literature has been published 
and distributed in the hope of checking the tend- 
ency, if tendency there is, towards compulsory state 
insurance. The Workmen's Compensation Public- 
ity Bureau in New York City, supported by the 
insurance companies, has been the most active and 
efficient agency for the dissemination of their ideas 
on the subject; and the Workmen's Compensation 
Service Bureau, through its actuarial activities in 
a wide field, has furnished the stock companies with 
the weapons to fight state insurance, both in the 



INSURANCE FEATURES 141 

forum and the arena of active competition. The 
monopolistic state insurance acts of Washington, 
Oregon, Nevada and Wyoming; the semi-monop- 
olistic laws in force in Ohio and West Virginia; 
and even the state funds maintained in competition 
with private insurance, which we find in New York, 
Idaho, Maryland, Michigan, Montana, Utah, and 
some other states, have been the target of fierce at- 
tacks. Every argument impugning the apparent 
state socialism of these laws, and many more based 
on the peculiar nature of the business, have been 
utilized by the stock companies and their ingenious 
advocates. 4 a 

On the other hand, state commissions and other 
presumably unbiased investigators have shown a 
strong tendency to favor state insurance above all 
other forms of security for awards. On the ques- 
tion of whether state funds should be monopolistic 
there is by no means the same agreement. In New 
Jersey, for instance, the Reports of the Employers' 
Liability Commission for 1914 and 1915 urge the 
introduction of compulsory insurance, but add that 

4a That the private insurance interests have strenuously and con- 
sistently opposed attempts to inaugurate state insurance, see Wilson, 
Workmen's Compensation and Employers' Liability Acts, p. 66; 
Clark, Constitutionality and Construction of Workmen's Compensa- 
tion Laws, p. 286. 



142 WORKMEN'S COMPENSATION AND INSURANCE 

"the establishing of a State Fund would seem to 
be essential to ensure equitable rates on the part of 
the privately owned companies and associations, and 
to prevent the establishment of a monopoly, by 
agreement or otherwise, by these companies." The 
impression, indeed, seems to be widespread that 
competition, or potential competition, by the state 
in the field of workmen's compensation insurance, is 
chiefly useful in keeping other carriers on their good 
behavior. Those who hold this view, however, are 
to be reckoned among the supporters of state funds, 
and as answering the venomous strictures of out- 
raged private insurance with a point-blank refusal 
to tolerate the unrestricted domination of the great 
public field of compensation insurance by organiza- 
tions having a pecuniary interest in the mainte- 
nance of high premium rates and the disallowance 
of claims. 

A very real problem is presented by the insuffi- 
cient provision too often made for future liabilities 
of state funds, where they exist. One of the grav- 
est dangers lurking in the way of all experimenters 
in insurance is the tendency to collect small premi- 
ums to pay for current losses only, and not accum- 
ulate sufficient reserves to meet deferred claims. 
Politicians in state legislatures, afraid of offending 



INSURANCE FEATURES 143 

the employing classes by exacting large payments, 
are especially likely to be victims of this fallacy; 
and there has been a regretable tendency to incor- 
porate these errors into the State insurance funds, 
many of which, from an actuarial standpoint, are 
said to have been insolvent from their inception. 5 
To those who point the finger of scorn at these trans- 
gressions, the advocates of state-managed insurance 
can only say, that such faults are to be condoned in 
a system scarce out of its swaddling clothes ; that at 
least no serious catastrophe has yet occurred, and 
improvements are already perceptible; and that in 
time, and with the cooperation of those experienced 
actuaries who are as yet kicking against the pricks 
in a vain endeavor to avert the inevitable substi- 
tution of state for private insurance of compensa- 
tion awards, the last of the disquieting features of 
amateurish and speculative dealing with state funds 
will disappear, and the system become established 
on a sound and permanent business basis. 

One of the most frequently voiced objections to 
state insurance is that it puts into the hands of 
political officials what is essentially a matter of 
pure business administration. As one writer has 

5 Bradbury, Workmen's Compensation and State Insurance Law 
(2d Ed.), pp. 63-64. 



144 WORKMEN'S COMPENSATION AND INSURANCE 

phrased it: "Should insurance as a system, now 
closely supervised by the State, be taken away from 
present agencies of great skill — the insurance com- 
panies of to-day — and be remitted to our Ameri- 
can system of politics, partisanship, and pull?" 6 
Similar expressions, showing a lamentably low 
opinion of the integrity and efficiency of American 
officialdom, occur in many publications on the sub- 
ject. 7 To establish their contention, these writers 
have cited a number of circumstances in which man- 
agement by officials has been notoriously incompe- 
tent. For example, it is said that state insurance 
never results in a proper differentiation of rates, as 
illustrated by the case of Norway, partly because 
officials are afraid that they would arouse suspicions 
of favoritism if they should attempt to discriminate 
between particular establishments, and partly be- 
cause the endeavor to attain a cheap administration 
compels them to dispense with the inspection force 

6 See article by William H. Hotchkiss on "The Case against State 
Insurance" in The Outlook, vol. 103, pp. 487-490 (March 1, 
1913). 

7 For similar expressions of distrust, see address by F. Robertson 
Jones, delivered at the Temple University, Philadelphia, Pa., Dec. 15, 
1915, on "Case against State-managed Insurance under Workmen's 
Compensation Laws," at p. 12; pamphlet on Advantages and Disad- 
vantages of Insurance in the New York State Insurance Fund (Feb. 
1916), at p. 15; pamphlet by R. D. Steele, Shall the State Engage 
in the Insurance Business? (Dec. 1911). 



INSURANCE FEATURES 145 

necessary to differentiate rates successfully. 8 
Again, the claim is made that the almost autocratic 
power given to the officers in charge of a state in- 
surance fund results in a tendency on their part to 
distribute charitable relief or political favors at 
employers' expense. 9 

On the other hand, the records of the casualty 
companies themselves have been far from clean. A 
former superintendent of insurance of New York 
State admits the "questionable practices which were 
formerly resorted to" by some of the corporations 
underwriting employers' liability insurance. The 
common law, however, with its encouragement of 
litigation by leaving to courts and juries the amount 
recoverable by an injured employee, is said by this 
writer to be chiefly responsible for the unpopularity 
of these companies — an unpopularity so great that 
their mere inclusion as one of the four groups of 
carriers between which an employer might elect 
under the New York compensation act, caused a 
storm of protest. "Definite and certain compensa- 
tion for each kind of injury," we are told, will put 
an end to "the controversies which have been in- 

» See "A Resume of the Arguments against State Insurance," Re- 
vised and Reprinted Jan. 1914, by Workmen's Compensation Pub- 
licity Bureau, pp. 12-13. 

s Ibid., p. 14. 



146 WORKMEN'S COMPENSATION AND INSURANCE 

evitable" under the old system of employers' liabil- 
ity; and the casualty companies should be left at 
least "the bare right to struggle for existence a little 
while longer in competition with newer — and, as 
some people claim, better forms of insurance." 10 
A pitiful plea! 

The statements just quoted are those of an apolo- 
gist for the private companies, but they represent 
the views of that large group of insurance men 
who, besides being sufficiently confident of the 
efficiency of their system not to be afraid of fair 
competition by the State, are willing to concede the 
bracing effect on all carriers of a battle with state 
and mutual insurance. But the disparagement of 
state insurance and all inteference with what is 
called "the private concern of the casualty com- 
panies" is by no means silenced, and finds voice in a 
review of the workmen's compensation situation in 
1916 by a prominent insurance man: 

"As a whole, the State funds have accomplished 
nothing to demonstrate their usefulness during the 
year. In some States these State funds have made 
decidedly bad records, and this is particularly true 
of States in which a State fund monopoly has been 

10 Memorandum submitted to the Governor in the matter of the 
Senate Insurance Committee's Workmen's Compensation bill, May, 
1913, by the Superintendent of Insurance (Hon. William T. Emmet). 



INSURANCE FEATURES 14? 

attempted. . . . The companies are undoubtedly 
harassed to an unreasonable extent in some direc- 
tions by what may be called 'too much govern- « 
merit.' " " 

The detailed criticism of the State funds — the 
reasons why insurance in them is less desirable for 
all parties concerned than insurance in the casualty 
companies, according to the advocates of the latter 
— can only be touched upon here. One ingenious 
critic has suggested that a policy in the state fund in 
New York gives incomplete protection to the em- 
ployer, because it only insures against his liability 
under the compensation law, leaving all his other 
possible liabilities (which the writer proceeds to 
enumerate) uncovered; a contention which seems 
easily answered by stating that that is all such a pol- 
icy was intended to do, and that the casualty com- 
panies should be glad to have the residuary risk left 
them to insure ! 12 The old cry that "public service 

11 See article in Financial section, New York Times, Dec. 31, 1916, 
by Walter G. Cowles, vice-president Travellers' Insurance Company, 
at p. 17. 

12 The quotation is from P. Tecumseh Sherman's "Advantages and 
Disadvantages of Insurance in the New York State Insurance Fund" 
(Feb. 1916), pp. 5 et seq. My criticism of Mr. Sherman's argu- 
ments may be unfair if his real thesis is that for an equivalent in- 
vestment the stock companies give more complete protection than the 
state fund; but if the gist of his contention is that the state is at 
fault in not undertaking to insure against more risks, it is irrecon- 



148 WORKMEN'S COMPENSATION AND INSURANCE 

is inferior to private service both in quality and 
convenience" is often reiterated, 13 and may be dis- 
missed with the remark that the United States Par- 
cels Post is a striking illustration to the contrary. 
An argument worthy of more consideration is that 
under state insurance a "flat" rate of premium, not 
adjusted to the risk of the particular establishment, 
is likely to be adopted; with the result that "the in- 
dividual employer is freed from any economic in- 
ducement to prevent accident, since his competi- 
tors must share with him pro rata any loss thereby 
incurred." 14 It is true that there is a tendency in 
state insurance acts, and in the administration of 
them, to follow the line of least resistance and treat 
all members of one trade class alike, regardless of 
the degree of zeal for accident prevention displayed. 
In extenuation it may be said that since the state 
by statute compels adherence to certain safety regu- 
lations, complete disregard of the employees' well- 
being even by the most conscienceless employer is 

cilable both with his bias toward private insurance and his specific 
arguments with regard to the dangers of permitting the state to 
undertake to insure at all. 

is Ibid., p. 16. 

I* See pamphlet by Edwin S. Lott, "What Will Be the Best for 
the Workman?" p. 13; also Address by J. W. Lord on "Employers* 
Liability and Workmen's Compensation Laws," delivered at the 17th 
annual meeting of the Maryland State Bar Association, July, 1912, at 
p. 22. 



INSURANCE FEATURES U9 

impossible; but, of course, an ideal law would en- 
courage voluntary effort along humanitarian lines. 
State insurance laws, however, do not necessarily 
impose flat rates ; and there is reason to believe that, 
as the industrial commissions grow in wisdom and 
experience, they will follow more and more the lead 
of the casualty companies themselves in differentiat- 
ing between individual employers, leaving a wider 
discretion in the administrative officers, to the end 
that enthusiasm for accident prevention may be en- 
couraged. 

Of course, the attention and credence which the 
various arguments against state insurance, that I 
have discussed, will receive, depends largely on the 
reader's bias. As they are rooted in prejudice, and 
nourished on the ingenuity of special advocacy, it 
is to be expected that those who meet state socialism 
more than half-way will be ready with flat denials, 
and theoretical arguments of equal force if a dif- 
ferent premise be conceded. The literature of de- 
fense is somewhat less accessible than that of criti- 
cism, but the following account of experience with 
the California state-managed fund, which is oper- 
ated in free competition with private companies, is 
enlightening in view of the scornful comments on 
official ineffectiveness : 



150 WORKMEN'S COMPENSATION AND INSURANCE 

"In spite of a most strenuous competition of 25 
corporate companies and several inter-insurance 
carriers, the business written by the Fund exceeded 
all expectations. . . . The mere establishment of 
the fund caused compensation rates for the year 
1914 to be reduced about 25 per cent. Its experi- 
ence during the past 12 months has demonstrated 
beyond question that the rates fixed for California 
by the Workmen's Compensation Service Bureau 
have been too high. . . . To secure 1915 business, 
one of the stock companies has announced a flat re- 
duction of 30 per cent, in rates. Others are carry- 
ing risks for a month or more free of charge. . . . 
Several companies have already withdrawn from 
the field. The fund, however, even with a greatly 
increased office force, has been unable to keep up 
with the business which has come to it with the open- 
ing of the new year." 15 

The report of the California Industrial Accident 
Commission for the year ending June 30, 1915, 
showed the Fund approximately $144,000 ahead 
of its nearest competitor in net compensation insur- 
ance premiums ; the department stating that "it has 
now been demonstrated beyond a doubt that it is 

is Ira B. Cross in The Survey, vol. XXXIV, pp. 17S-174 (May 22, 
1915). 



INSURANCE FEATURES 151 

possible for the State permanently and economically 
to conduct an insurance enterprise." 16 

And finally, the Industrial Accident Commis- 
sioner's report for the year ending June 30, 1916, 
says: "That the State Compensation Insurance 
Fund of California has proved a pronounced suc- 
cess is now generally conceded by all who have been 
in a position to watch its progress. Since the end 
of its first year, when its volume of compensation 
premiums exceeded that of any other insurance car- 
rier operating in the state, its commanding lead 
over competitors has steadily increased and its as- 
sets have grown to an amount exceeding $1,000,- 
000." 17 

The statement has so often been made, that no 
state-managed fund can survive in fair competition 
with the established private companies, that the 
passage just quoted is especially significant; for, 
of all the American jurisdictions which have state 
insurance of workmen's compensation, California 
has adopted the fairest regulations as to competi- 

16 Report of California Industrial Accident Commission, July 1, 
1914, to June 30, 1915, reviewed in Monthly Review of U. S. Bureau 
of Labor Statistics, vol. II, No. 5, pp. 51-54 (May, 1916). 

it Report of California Industrial Accident Commission (see text) ; 
reviewed, Monthly Review, U. S. Bur. of Labor Statistics, vol. IV, 
No. 3, p. 409 (Mar. 1917). 



152 WORKMEN'S COMPENSATION AND INSURANCE 

tion. 18 The State Insurance Commissioner is re- 
quired to issue a uniform classification of risks and 
premium rates, which must be adhered to by all 
compensation carriers, including the State fund. 19 
Underwriters all start on an even basis, and the 
fact that the State fund has been able practically 
to crowd private companies out of the field of com- 
pensation insurance, is a striking refutation of the 
aspersions on official incompetence. 

The report of the Maryland commission on the 
operation of the workmen's compensation law for 
the year ending October 31, 1915, also throws light 
on the success of a state accident fund in competi- 
tion with private insurance. Only 7 per cent, of 
the business was underwritten by the State fund; 
but the appearance of this new rival seems to have 
put the fear of God in the hearts of the insurance 
companies, for premium rates were reduced about 
15 per cent. 20 

In Massachusetts there is no genuine state insur- 

is See author's note in 17 Columbia Law Review 75-78 (Jan. 1917). 
Insurance concerns in California are permitted to operate under con- 
ditions which would prevent their getting licenses in many states. 
Report of Cal. Industrial Accident Comm., July 1, 1915, to June SO, 
1916, at page 26. 

is Cal. Laws 1915, c. 642. 

20 First Annual Report of State Industrial Accident Commission 
of Maryland, for year Nov. 1, 1914, to Oct. 1, 1915. 



INSURANCE FEATURES 153 

ance ; but an Employees' Accident Insurance Asso- 
ciation, operated on the mutual plan, in competi- 
tion with other mutual and stock companies, is 
created by the compensation law. 21 For the two 
and one-half years from July 1, 1912, to December 
31, 1914, the total expense of operation of the stock 
companies was 32.81% of earned premiums in 1912, 
35.68% in 1913, and 36.33% in 1914, while the per- 
centages for the mutuals were 14.17, 17.02 and 17.37 
for the same periods. 22 These discrepancies were 
so serious as to arouse suspicion both that premium 
rates were exorbitant and that a monopoly or com- 
bination to fix rates existed among the insurance 
companies ; and accordingly a commission of investi- 
gation was appointed by the legislature of 1914. 23 
The investigators reported that practically all the 
stock companies writing insurance in the state were 
members of the Workmen's Compensation Service 
Bureau in New York City, and had authorized a 
single man to change compensation rates for Mas- 
sachusetts alone for competitive purposes — an ar- 
rangement characterized as "indefensible." Under 
this plan, however, premium rates, which had been 

21 Mass. Acts 1911, c. 751, Pt. IV. 

22 Monthly Review of U. S. Bureau of Labor Statistics, vol. II, no, 
5, p. 55 (May, 1916). 

23 Mass. Acts and Resolves 1914, c. 160 of Resolves* 



154 WORKMEN'S COMPENSATION AND INSURANCE 

scandalously high formerly, had been materially 
reduced, though some sort of equalization was 
needed. The necessity of state supervision and 
regulation is strongly affirmed by the Commission. 24 

Another state which has found mutual insurance 
more economical than that conducted by stock com- 
panies is Wisconsin. The Industrial Commission 
stated under date of June 1, 1915, that if all com- 
pensation insurance during 1914 had been carried 
in Wisconsin mutuals the net saving to employers 
would have been over $500,000 of the premiums 
actually paid. 25 A table of expense benefits shows 
that Wisconsin mutuals paid 60 cents on the dollar, 
in benefits to workmen, as against 48 cents by stock 
companies; 22 cents as surplus to policyholders as 
against the private insurers' 14 cents to stockhold- 
ers; and only 18 cents were spent on agents, ad- 
justments, and all other expenses, whereas the stock 
companies paid 38 cents for those purposes. 26 

In its very first report, the Iowa Industrial Com- 
mission bewails the "oppressive insurance premiums 
charged by the private companies." In coal mines, 

2* Monthly Review (supra), vol. II, no. 1, pp. 45-48 (Jan. 1916). 

25 Wis. Industrial Commission, Workmen's Compensation Insurance 
Bulletin, issued June 1, 1915, and reviewed in Monthly Review of 
U. S. Bureau of Labor Statistics, vol. II, no. 1, pp. 53-62, especially 
p. 54 (Jan. 1916). 

26 Ibid., p. 55. 



INSURANCE FEATURES 155 

for instance, the basic rate was $6.50 per $100 of 
pay roll as compared with $1.50 under the State 
fund plan in Ohio. The Commission says: "A 
collective fund administered by the State is a rem- 
edy for all these evils and inequalities. Such a 
system would make an end of excessively high 
rates." 27 

The Montana compensation law, which provides 
for state insurance in competition with both mutual 
and stock, has not only brought about a reduction in 
rates, but, according to the commission which ad- 
ministers it, has obtained a superlative degree of 
success: "Only two assessments were levied 
against these firms during the year at a total cost 
to employers of a little more than one-half of one 
per cent, on their annual pay rolls, 'which perhaps 
represents as low an insurance cost to employers 
operating under compensation laws as exists any- 
where in the world. Yet, despite this low premium 
cost, a surplus of $22,684.56 has been accumulated 
in the fund which represents three times the amount 
that has been paid out.' " 28 

Some of the difficulties which attend upon the in- 
itiation of such a novel scheme as state insurance of 

27 Monthly Review (supra), vol. II, no. 2, pp. 61-63 (Feb. 1916). 
28 Monthly Review (supra), vol. Ill, no. 6, pp. 22-26 (Dec. 1916). 



156 WORKMEN'S COMPENSATION AND INSURANCE 

compensation awards are illustrated by the experi- 
ence of the West Virginia Public Service Commis- 
sion. The premiums for the first three years in the 
mining industries, estimated to have been ample to 
provide for all liability growing out of accidents 
during that period, proved greatly inadequate, 
owing to an increased number of permanent and 
fatal injuries, especially in the Eccles mine disaster 
of April 28, 1914. The maximum rate of premium 
under the law was $1 per $100 of pay roll; but the 
loss ratio for the first 9 months was $2.08 per $100. 
To overcome the deficit a rate of $1.89 per $100 
will have to be assessed in the coal-mining indus- 
try for a period of four years ; and in mining other 
than coal an average rate of $1.54 per $100 of 
pay roll will be required. Such miscalculations 
lend color to the contention of the private com- 
panies that inexperience will seriously handicap 
state insurance; but the disasters with which the 
West Virginia fund has had to cope are of such rare 
and exceptional nature as to warrant the belief that 
a very little more elasticity in the powers of the 
administrative commission will prepare it for any 
contingency. 29 

The Ohio State Insurance Fund is one of the 

29 Monthly Review (supra), vol. II, no. 2, pp. 76-81 (Feb. 1916). 



INSURANCE FEATURES 157 

oldest and most successful of its kind. In its State- 
ment of Condition, under date of May 15, 1916, are 
collected statistics which present a triumphant refu- 
tation of the criticisms of unbusinesslike manage- 
ment levelled against the system by its enemies. 
The Fund is "in an ideal condition of solvency": 
and a comparison of its current rates for 82 repre- 
sentative industries with those of liability insurance 
companies in neighboring states shows that the Ohio 
system effects a great saving for the employer. 
Taking the charges of the Fund as 100%, the per- 
centages of the States examined are: Pennsyl- 
vania, 137; Indiana, 157; Michigan, 160; Illinois, 
201; Wisconsin, 215; Kentucky, 225; Ohio (stock 
companies), 232. These amazing differences are 
partly explained by the fact that the Ohio plan has 
been operated at an expense ratio equivalent to 
11% of the earned premiums as compared with an 
expense ratio of the liability companies of 45 %. 30 

"The claim of superior service advanced by the 
stock companies is without foundation in fact," is 
the statement made in a publication of the New 
York State Insurance Fund and indorsed by 
the Industrial Commission. 31 To this may be 

so Monthly Review (supra), vol. Ill, no. 3, pp. 60-63 (Sept. 1916). 
3i Monthly Review (supra), vol. II, no. 4, at p. 64 (April, 1916). 



158 WORKMEN'S COMPENSATION AND INSURANCE 

added the pointed reference made by the superin- 
tendent of insurance in his 1915 report to "the 
higher cost of stock insurance with its agency ex- 
pense," as proof of the growing recognition of the 
fallacy of one of the chief arguments against the 
state plan. 32 

Indeed, the New York State Insurance Fund 
charges rates that average 20% lower than those of 
the casualty companies, and has paid dividends 
averaging 20% of the first policy term and 15% on 
the second. 33 The high degree of security offered 
to employers and employees is another great ad- 
vantage; and the charge that politics have played 
any part in the administration of the New York 
fund is declared to be unfounded. 34 

A suggestion of inexpertness in the drafting of 
the compensation law of Nevada is conveyed by the 
report of the operation of the act for the 30 months 
ending December 31, 1915. The framers intended 
that 10 per cent, of premium income should be set 

32 Preliminary text and tables, 57th annual report of superin- 
tendent of insurance, covering transactions of calendar year closing 
Dec. 31, 1915. Reviewed, Monthly Review (supra), vol. II, no. 4, pp. 
64-66 (April, 1916). 

33 See article by F. Spencer Baldwin on "Advantages and Disad- 
vantages of State Funds in Workmen's Compensation," in Amer. 
Labor Legislation Review, vol. IV, p. 3 (March, 1916). 

s* Ibid., pp. 5, 10. 



INSURANCE FEATURES 159 

aside for the purpose of creating an insurance re- 
serve fund to provide for and absorb the shock of a 
catastrophe without doing violence to the general 
fund; but during the period covered by the report 
receipts fell short of being sufficient to create this 
reserve by $16,790.21, or nearly one-third of the 
amount needed. That is to say, the actuarial cal- 
culations of the framers failed in operation to meet 
the current demands, and the resultant shortage had 
to be made up out of the fund designed as a re- 
serve, though there appear to have been no particu- 
larly heavy casualties to account for the situation. 35 
As Nevada is one of the states in which monopolistic 
state insurance obtains, these official errors are fair 
game for the enemies of the system. 

For the most part, however, the reports we have 
reviewed are a record of success for state insurance, 
even under the test of severe competition with the 
established private carriers. We are far from over- 
looking the element of bias in the statements of 
officials charged with the success of the system ; but 
we are unable to avoid the conclusion, from the 
facts and figures set before us, that in actual opera- 
tion state insurance has given the lie to those who 

35 Monthly Review (supra), vol. Ill, no. 3, pp. 55-58 (Sept. 1916). 



160 WORKMEN'S COMPENSATION AND INSURANCE 

accused the theory of fatuity, and its administrators 
of corruption and inefficiency. 36 

There is no attempt to disparage the excellent 
work done by the private companies along lines of 
actuarial calculation, accident prevention, etc. 
Without this expert smoothing of the way, the un- 
dertaking of insuring compensation awards would 
have been a dangerous venture for governmental 
agencies. I have before me now a pamphlet of 174 
pages entitled "Safeguards," profusely illustrated, 
with illuminating text, devoted wholly to practical 
suggestions for the operation of industrial plants 
with greater safety to the toilers, explaining the 
most modern and effective devices for safe-guard- 
ing machinery as well as the precautions the work- 
man himself should take in handling it. This is a 
publication of the iEtna Life Insurance Com- 
pany. 37 The Monthly Review of the United States 
Bureau of Labor Statistics for November, 1916, 

36 Of course, there have been some falls from grace. Gov. Whit- 
man of New York, in an Emergency Message to the Legislature 
under date of Feb. 3, 1915, which has been seized on with avidity by 
the enemies of state insurance, accuses the Workmen's Compensation 
Commission of "gross extravagance and waste." German compensa- 
tion insurance, and particularly the Imperial Insurance Office, has 
been severely arraigned by Dr. Ferdinand Friedensburg, a former 
president (The Practical Results of Workmen's Compensation in 
Germany, 1911). 

37 Safeguards (for the prevention of Industrial Accidents), edited 
by David Van Schaack (Hartford, Conn.: ^Etna Life Ins. Co., 1910). 



INSURANCE FEATURES 161 

comments on the activity of the Workmen's Com- 
pensation Service Bureau, an organization sup- 
ported by a group of insurance companies, in an- 
alyzing the statistics of accident losses with a view 
to ascertaining the lowest practicable compensation 
rates. 38 Such work cannot be too highly com- 
mended. 

But it is difficult to see why this success of pri- 
vate companies in preparing the ground should be 
an argument for the continuance of compensation 
business in their hands, after the social cost of some 
other system has been proven to be less. Vested 
interests should be protected so far as is consistent 
with the public good ; but we are far from admitting 
that private companies have acquired such a claim 
on the traffic in compensation insurance that the 
combined interests of employer, employee, and con- 
suming public should be subordinated thereto. 
There is some force in the plea of the stock com- 
panies to be allowed to compete, though competi- 
tion tends to undermine security by reducing rates 
below the margin of safety, and by inducing extrav- 
agant selling costs; 39 but none in the demand that 

38 Monthly Review of U. S. Bureau of Labor Statistics, vol. Ill, 
no. 5, pp. (629)-(631), (Nov. 1916). 

39 See "Plea for an Open Field" in The Independent, vol. LXXIV, 
p. 788 (April 3, 1913) ; also "State Insurance," an address by Arthur 



162 WORKMEN'S COMPENSATION AND INSURANCE 

the state shall wash its hands of compensation in- 
surance. 

In this connection the claims of the mutual sys- 
tem to our attention must not be overlooked. No 
less an authority than Dr. Rubinow, after advocat- 
ing "a freedom of choice between stock casualty 
companies, mutual associations, and state insur- 
ance funds," has stated that "European experience 
has conclusively shown that when such competition 
is permitted, mutual associations slowly but inevi- 
tably grow at the expense of all other insurance 
institutions." 40 

This claim does not seem wholly to be borne out 
in the experience of our American states — thus, in 
New York,' "notwithstanding the higher cost of 
stock insurance with its agency expense, the em- 
ployers, as a whole, seem to prefer that form of pro- 
tection," 76 per cent, of the workmen's compensa- 
tion risks having been carried by stock companies, 
13 per cent, in the state insurance fund, and only 11 
per cent, by mutual companies during the year 
1915. 41 In California, as we have seen, state in- 

I. Vorys before the Insurance Federation of Ohio, Cincinnati, Feb. 
26, 1914. But see 24 Journal of Political Economy, pp. 958 et seq., 
for. an account of the dangers of competition among workmen's com- 
pensation insurance carriers. 

40 Rubinow, Social Insurance, p. 187. 

4i Preliminary text and tables, 57th annual report of the super- 



INSURANCE FEATURES 163 

surance has been carrying all before it, both mutual 
associations and stock companies being forced into 
the background. A recent review of the compen- 
sation situation puts the business of all the mu- 
tual compensation companies at not more than 
5 per cent, of the premiums paid for workmen's 
compensation insurance in the United States dur- 
ing 1916. 42 It is only in Massachusetts and Wis- 
consin that mutual insurance, regulated in many 
details by the state, has been having a really tri- 
umphant progress, as already described. In those 
states, it will be noted, there is no state-managed 
insurance; so the best that can be said for the 
mutual plan, in the light of the meager American 
experience, is that in the few instances in which 
it has justified itself its elimination of the element 
of private profit has enabled it to compete success- 
fully with the ordinary casualty companies. 

It may be that the State insurance of the future 
will expand the principle of mutuality (a principle 
already recognized in the Oregon compensation 
law 43 ) , by calling on employer and employee alike 

intendent of insurance of New York, covering transactions of calen- 
dar year closing Dec. 31, 1915. Reviewed in Monthly Review (su- 
pra), vol. II, no. 4, pp. 64-65 (April, 1916). 

42 See footnote 11. 

« Oregon Laws 1913, c. 112, sec. 19. 



164 WORKMEN'S COMPENSATION AND INSURANCE 

to contribute to the Fund; but nothing that has as 
yet been revealed has really discredited the State 
as an underwriter in favor of "pure mutuals." 
The superior stability of a state-managed fund, its 
economy, the public interest in the subject-matter, 
and the moral responsibility of the commonwealth 
for the fund's solvency, (a responsibility, we insist, 
that would cheerfully be shouldered in case of need, 
despite the legal barriers which some legislatures 
have seen fit to erect against its enforcement), are 
all reasons for placing workmen's compensation in- 
surance in the hands of government agencies, 
against which the arguments springing from pe- 
cuniary bias or un-American distrust in the honesty 
and capacity of officials of the people's choice can- 
not long prevail. 

Economy has been mentioned as among the posi- 
tive advantages of compulsory monopolistic state 
insurance. A cautious writer has estimated that 
stock companies in the United States absorb at 
least 60 cents for every dollar of compensation 
benefits actually reaching the injured party; and 
even large and well-managed mutuals maintain an 
expense ratio of from 30 to 35 cents. 44 In the Ger- 

44 E. H. Downey in 24 Journal of Political Economy, pp. 977-978 
(Dec. 1916). 



INSURANCE FEATURES 165 

man Empire, on the other hand, the cost of admin- 
istration is only 16 per cent of the benefits paid; in 
Norway, 15 per cent; in Ontario, 13 per cent; and 
in the State of Washington, 9 per cent. 45 As some 
form of monopolistic state insurance is in force in 
all of these latter jurisdictions, the significance of 
the low expense ratios is at once apparent. 

Competitive waste is in large measure responsi- 
ble for the costliness of the haphazard methods of 
insuring compensation awards that prevail in most 
of our states. It is said that employers in New 
York State pay about $5,000,000 annually for the 
"luxury of competing insurance" ; and that for the 
same premiums, under an economical centralized 
management, fully 25 per cent could be added to 
the aggregate of compensation benefits. 46 The 
elimination of selling costs is the chief saving ac- 
complished by monopolistic state insurance; and 
when the obligation to insure is compulsory on all 
employers, there is no economic justification what- 
ever for the solicitation which is a concomitant of 
the competitive system. A certain duplication of 
administrative staffs, claim adjusters, and so forth, 
is also done away with when the State takes over 
the exclusive control of compensation insurance. 

45 Ibid. 46 ibid., p. 979. 



166 WORKMEN'S COMPENSATION AND INSURANCE 

The superior security of the monopolistic state- 
managed fund is another of its advantages. Its 
subscribers cannot withdraw at will, and the power 
of assessments in a group of establishments of any 
considerable size will always suffice to meet accru- 
ing payments to workmen on account of accidents. 
Premiums can be kept low enough to cover only 
current disbursements, and yet the fund will be 
solvent; for if the number of accidents increases, 
an increased rate or special payment may be ex- 
acted without hardship because of the large number 
of establishments among which the burden will be 
distributed. The conjectural element, so much of 
a problem to private insurance carriers, who must 
fix their rates in advance and cannot resort to the 
assessment panacea, is absent. 47 

It is because the day of reckoning in work acci- 
dent insurance is so long postponed that the reduc- 
tion of rates below the margin of safety by carriers 
bidding against each other and underestimating the 
magnitude of the deferred liabilities, is an ever- 
present danger of the competitive system. The 
fiddler must be paid in the end; but the insurance 
companies are meanwhile "free, so far as cash obli- 
gations go, to demoralize their rates and waste their 

47 Ibid., pp. 963-964. 



INSURANCE FEATURES 167 

substance in fancy salesmanship." 48 When the 
state steps in, with its control of both reserves and 
rates, and with the whole volume of compensation 
business in the hands of a single responsible carrier, 
a stability is attained which is impossible under a 
system that tempts small companies, liable to be 
wrecked completely by a single great disaster owing 
to the inconsiderable volume of their business and 
the consequent insufficiency of their reserves, to 
count on a loss ratio no worse than the average. 49 

Compulsory state-managed insurance is not only 
superior to competitive insurance in security and 
economy, but it makes for a more equitable distri- 
bution of accident cost. Competition leads to an 
infinite subdivision of risk classes. The less haz- 
ardous members of a group are singled out at once 
by carriers eager to underwrite their risks; less at- 
tractive clients are served by some companies and 
scorned by others; until the members of a homo- 
geneous group of employers in a given industry are 
scattered so widely among the various carriers that 
anything like accurate data upon which to base sci- 

48 Ibid., p. 958. Statistics from Massachusetts and Michigan are 
cited by Mr. Downey to show the disastrous situation brought about 
by rate-cutting by competing carriers. See also The Annals, vol. 
LXX, p. 308 (March, 1917). 

49 Ibid. 



168 WORKMEN'S COMPENSATION AND INSURANCE 

entific premium rates is wholly unobtainable. 
Conjectural rates are resorted to, resulting un- 
avoidably in unfair discrimination between risk 
classes, and in temptation either to charge individ- 
uals too little in order to undermine the business of 
a rival, or too much on the principle of exacting all 
that the traffic will bear. These conditions are the 
more apt to prevail because the bulk of insurance 
is sold through solicitors, who are paid on a per- 
centage basis and are therefore interested solely in 
the volume of premiums, and not at all in the ade- 
quacy or equity of rates. 50 

The remedy for the evils we have described is 
not governmental supervision, for the best that the 
supervising authority can do is to take the com- 
bined results of the experience of the various com- 
panies and substitute its judgment for that of the 
skilled underwriters who already have the matter 
in hand. Doubtless some good can be accom- 
plished by state regulation, especially where it 
comprises all carriers and is authorized to apply 
"merit rating" to individual risks; but risk classes 
under competitive conditions never have a sufficient 
exposure to enable anybody to determine a proper 
rate from actual experience. Moreover, the flexi- 

50 Ibid., p. 970; see also Gephart, Insurance and the State, p. 187. 



INSURANCE FEATURES 169 

bility which is cited as the chief advantage of private 
insurance disappears with too rigid regulation. 

The establishment of monopoly, on the other 
hand, "greatly lessens the pressure toward minute 
splitting up of risk classes . . . and makes possible 
a retrospective rating system whereby accident cost 
is measured by actual outlays." 51 The retrospec- 
tive (or assessment) plan results automatically in 
distributing the abnormal loss of a catastrophic 
year in an industry over a whole generation, and 
makes possible the application of the "principle of 
occupational risks to much smaller industrial 
groups than is possible to competitive insurers." 52 
It is true that many state funds have failed to take 
advantage of the possibilities for scientific risk 
classification which the possession of their monop- 
oly renders available, and have clung to the falla- 
cious "capitalized-reserve" plan. But the door to 
better things is opened when compulsory state- 
managed insurance is adopted, and with a combi- 
nation of intelligence and impartiality in adminis- 
tration an infinitely more equitable distribution of 
accident cost is possible than under competitive con- 
ditions. 

The author has stated elsewhere, and here re^ 

5i Ibid., p. 972. 52 Ibid., p. 973. 



170 WORKMEN'S COMPENSATION AND INSURANCE 

iterates most emphatically, that workmen's com- 
pensation can serve no higher purpose than the 
prevention of industrial accidents. Devised pri- 
marily to bring about a more just distribution of a 
burden, its utility increases a thousandfold if it also 
serves to lessen the weight of that burden. Indeed, 
that form of compensation administration which 
brings about the greatest reduction in accidents 
may fairly be said, without further examination of 
its merits, to have made the greatest contribution 
to social welfare. 

The proper study of the insurance carrier in this 
field has been said to be to "stimulate prevention 
both by advice and instruction, and by furnishing 
a pecuniary incentive in the way of merit rating." 53 
The employer, who alone controls working condi- 
tions, is primarily to blame if they are unsafe and 
unsanitary; and much may be done by awakening 
him to a sense of his social responsibility through 
propaganda and well-directed public opinion. 
Much, too, has been and will be accomplished by 
safety appliance acts and other forms of legislative 
interference; but when all is said, the influence ex- 
erted by measures directly affecting the employer's 
pocketbook constitutes the most powerful weapon 

53 ibid. 



INSURANCE FEATURES 171 

that can be wielded in behalf of accident pre- 
vention. It is here that the insurance carriers, 
through their control over rates, have the greatest 
opportunity for public service. 

Under competitive conditions, "merit rating" — 
that is, the adjustment of premiums by the carrier 
so that that employer is charged the least whose 
record shows the smallest proportion of accidents, 
or whose adoption of safety appliances augurs best 
for the welfare of the workers — is apt to be con- 
spicuous by its absence. There is no inducement 
to install safety devices when the employer knows 
that, if one liability company attempts to raise the 
rates, another will always be ready to write his 
business at the old rate or a lower one. 54 Once a 
risk is taken, of course, no carrier is blind to the 
advantages of kindling the zeal of the insured for 
measures which will lessen the probability of a pay- 
ment having to be made; and the excellent work 
of some of the stock companies in instructing work- 
men and employers in safety measures has already 
been adverted to in these pages. But the faults 
of a prospective customer are apt to be overlooked 
in the scramble for business among competing con- 
cerns, and the same haphazard subdivision of risk 

54Gephart, Insurance and the State, pp. 187-188. 



172 WORKMEN'S COMPENSATION AND INSURANCE 

classes and speculative rate-making which have 
made competitive workmen's compensation insur- 
ance the foe of equitable distribution of accident 
burdens among employers, militate against the 
adoption by rival liability companies of any rational 
policy of accident prevention. 

The fact that private insurance is discredited as 
a force for reducing accidents does not, however, 
point to state insurance as the only solution. Some 
doubt may well be felt as to the comparative merits 
of the compulsory trade mutual and the state mo- 
nopoly in this respect; and one able writer favors 
the former as a practical agency for furthering the 
cause of accident prevention. This authority gives 
as his reasons that the members of a compulsory 
trade mutual have the knowledge of trade condi- 
tions necessary to draft proper standards ; that the 
association itself is under no competitive pressure 
either to lower the standards or to remit the penal- 
ties for non-compliance; and that the difficulty ex- 
perienced by an insurance carrier covering diverse 
industries, in that one particular employing group 
is constantly besieging the carrier to tone down the 
safety standards and reduce the schedule charges 
in order to obtain a differential advantage in basic 
rates or in merit rating, is done away with where 



INSURANCE FEATURES 173 

each trade has its own mutual insurance association 
and the members are "collectively and inescapably- 
responsible for the accident cost therein." This 
same author concedes, however, that many of the 
advantages of the trade mutual may be gained by 
a compulsory state fund divided into industrial 
sections with a collective interest and a technical 
relation to accident insurance like the German 
mutuals. 55 

It will, we think, be conceded by any unbiased 
student of compensation insurance, that fairness to 
the individual employer and efficiency in accident 
prevention can only be obtained by charging a rate 
of premium based on the zeal or success of the em- 
ployer in keeping the percentage of disabling acci- 
dents to his workmen at a low ebb. Merit rating, 
however, is not a proposition devoid of complica- 
tions. Rival schools exist which advance radically 
different theories. Thus, one group insists that 
the physical character of the individual risk should 
be the sole criterion of the rate to be charged ; while 
it is just as ardently urged on the other hand that 
the loss experience for a given risk during a given 
period should be subjected to detailed analysis and 
appraisal, and the class or basic rate modified in 

55 Mr. Downey in 24 Journ. of Pol. Econ., pp. 975-976 (Dec. 1917). 



174 WORKMEN'S COMPENSATION AND INSURANCE 

accordance with this experience. The first of these 
systems is called "schedule rating"; the other is 
known as "experience rating." 56 

Where the former scheme is in force, the under- 
writers depend upon a "schedule," in which a com- 
plete analysis of the average manufacturing plant 
and the normal items of hazard productive of indus- 
trial accidents is made, covering, among other 
things, the type of building construction, existing 
facilities for safety of employees against fire and 
panic hazard, the condition of floors, hoistways, 
stairs, boilers, etc. Standard methods of safe- 
guarding machinery and equipment, of instructing 
employees in accident prevention, and of improving 
the sanitary condition of the premises, are also out- 
lined in the schedule. With proper allowances for 
catastrophe hazard and peculiar risks in a given 
industry, the individual employer's establishment is 
then compared to the average or "schedule" plant, 
and the premium rate set higher or lower as the 
existence or absence of unusually dangerous condi- 
tions is established. The employer's direct pecun- 
iary interest in the installation of safety devices is 
thus made apparent. 57 

56 Leon S. Senior in The Annals, vol. LXX, pp. 264, 269 (March, 
1917). 

57 Ibid., pp. 264-265. 



INSURANCE FEATURES 175 

"Experience rating" is what its name indicates. 
The loss experience of the employer for a given 
period is subjected to analysis, and the rate of 
premium modified in accordance therewith. On 
behalf of this system it is urged that schedule rating 
can only take account of the physical conditions of 
the risk, and that moral conditions which account 
for high accident rates in some plants whose physi- 
cal attributes are ideal, can only be covered by a 
rating based on actual results. It is also stated 
that schedules have not been sufficiently developed 
to take care of other than manufacturing risks. 58 
Nevertheless, the balance of expert opinion seems 
to be in favor of accident rating; and the reasons 
are given by Mr. Downey: 

"Experience rating provides a certain incentive 
to accident prevention because it makes the estab- 
lishment rate depend in part upon the number and 
severity of injuries actually sustained in that estab- 
lishment during a given period, but it furnishes no 
guidance in methods of prevention, which often is 
the larger half of the problem. Schedule rating 
combines incentive with instruction; it provides 
definite standards of mechanical safeguarding, 
working methods, and (most important of all) the 

58 Ibid., p. 269. 



176 WORKMEN'S COMPENSATION AND INSURANCE 

education of workmen in 'safety first,' while at the 
same time it penalizes unsafe conditions and prac- 
tices." 59 

There are two methods of insuring compensation 
which must be mentioned here, because they have 
received legislative sanction in some States, though 
neither commends itself to a dispassionate mind. 
These are self -insurance and reciprocal or inter- 
insurance. The former has been summarily dis- 
posed of by a recent writer in the phrase "Self- 
insurance is really non-insurance" ; 60 and it is in- 
deed difficult to see how state inspection of com- 
pensation carriers can be effectively administered, 
when each employer may be his own insurer. Re- 
ciprocal insurance, managed through an attorney- 
in-fact who is really an irresponsible middleman, 
has secured remarkable privileges from some legis- 
latures ; but it is a speculative and hazardous under- 
taking, often tainted with fraud, with nothing to 
recommend it as a method of securing compensa- 
tion awards, and has been twice doubly damned by 
competent authorities. 61 

59 24 Journal of Pol. Econ., pp. 973-974 (Dec. 1916). 

soHarwood E. Ryan in The Annals, vol. LXX, p. 251 (March, 
1917). 

si See pamphlet on "Liability and Compensation Insurance on the 
Reciprocal or Inter-Insurance Plan" by P. T. Sherman; Ryan (su- 
pra), p. 252. 



INSURANCE FEATURES 177 

Although this chapter has been chiefly devoted 
to an attempt to establish the superiority of com- 
pulsory state-managed insurance over all other 
methods of securing the compensation award, there 
is no gainsaying the fact that the adoption of a 
strict state insurance law in one of our forty-odd 
commonwealths will be productive of hardships so 
long as neighboring states refuse to take similar 
action. The increased cost of doing business which 
adequate provision for one's employees entails, 
must be shifted to the consumer ; and what guaran- 
tee has the employer that his customers will not 
refuse to pay the advance in price of the commod- 
ity which he produces, and buy outside of the state 
from manufacturers not troubled by rising costs 
due to superimposed ideals of social justice? 62 
The problem is a very real one ; but its solution lies 
not in abandoning progressive legislation, but in 
securing its uniform enactment, and thus prevent- 
ing the shirker from profiting by his disregard of 
the obligations he owes the community. 

62 Gephart, Insurance and the State, pp. 191, 201-202. 



CHAPTER VI 

HOW IT WORKS IN NEW JERSEY 

The first of our States to have in full operation a 
permanent workmen's compensation act was New 
Jersey. 1 Approved on April 4, 1911, this interest- 
ing statute went into effect just three months later; 
so that for nearly seven years, New Jersey has 
been the chosen field of one of the most important 
legislative experiments which this country has 
known. It is due to this fact of the New Jersey 
statute's being the oldest of its kind in the United 
States, and hence the one whose merits and demerits 
have been submitted to the most searching tests of 
experience, that it has been selected for particular 
study here; though its own interesting and typical 
provisions would of themselves entitle it to the dis- 
tinction of separate treatment. 

i American Labor Legislation Review, vol. V, p. 34 (March, 1915). 
See also New Jersey Law Review, vol. I, p. 45 (May, 1915). The 
compensation law of Kansas was approved March 14, 1911, but was 
not made effective by its terms until Jan. 1, 1912; while the New 
Jersey act went into operation on July 4, 1911. The Nevada act, 
which by its terms was to go into operation July 1, 1911, has been 
entirely superseded by a statute of 1913. See Bulletin of the U. S. 
Bureau of Labor Statistics, No. 126, p. 313, and chart, p. 48; Report 
of Workmen's Compensation Aid Bureau of New Jersey, 1916, p. 9. 

178 



HOW IT WORKS IN NEW JERSEY 179 

The adoption of workmen's compensation by- 
New Jersey followed close on the heels of a legisla- 
tive attempt to deal with the industrial problem by 
"an act to extend and regulate the liability of em- 
ployers for injury or death to employees in cer- 
tain cases." 2 This statute, passed in 1909, had ex- 
pressly affirmed the doctrine of assumption of risk 3 
and had made "the exercise of reasonable care at 
the time" by the employee a condition precedent of 
recovery. Its sole advance over the common-law lay 
in the restrictions which it imposed on the operation 
of the fellow-servant rule. Where injury or death 
of an employee resulted from defects in machinery 
or plant due to the negligence of the employer or 
his servants, or by reason of the negligence of over- 
seers, or of any person in the employer's service 
entrusted with the control of any signal, switch, 
locomotive engine, or train upon a railroad — in 
these few cases the fellow-servant rule was to be 
relaxed, and its availability as a defense to the em- 
ployer done away with. There could be no more 
vivid illustration of the tenacity of the old system 
than the passage of so conservative a law at so late 
a date by a state destined to be one of the leaders in 
the compensation movement. 

2N. J. Laws 1909, c. 85; cited Pamphlet Laws 1909, p. 114. 



180 WORKMEN'S COMPENSATION AND INSURANCE 

In the two following years the first experiments 
with the new principle were made in the United 
States. But when the New Jersey legislature of 
1911 convened, the only American compensation 
acts on the statute books were those of New York 
and Montana, both soon to be declared unconstitu- 
tional by the courts. 3 Indeed, before the legisla- 
tion which we know as the New Jersey Workmen's 
Compensation Act had become a law, the New 
York Court of Appeals in the Ives case had found 
the compensation law of that state invalid as in- 
fringing fundamental constitutional guarantees. 

Just what influence the Ives case, coming so close 
before the actual passage of the New Jersey act, 
had on the drafting of that statute in the peculiar 
form which was adopted, it is impossible to say ; but 
there is not the slightest doubt that fear of the 
courts influenced the legislature in its choice of a 
system at least nominally optional. It was plain 
that a judiciary, however jealous of constitutional 
rights, would not have the same reason to take um- 
brage at an act which provided by its terms that the 
parties could contract out of it, as at one which left 
to those affected no choice in the matter. Events 

3 Ives v. South Buffalo Ry. Co. (1911), 201 N. Y. 271, 94 N. E, 
431; Cunningham v. Northwestern Improvement Co. (1911), 44 Mont, 
180, 119 Pac. 554. 



HOW IT WORKS IN NEW JERSEY 181 

proved that the New Jersey law-makers were cor- 
rect in this assumption. 4 

The ingenious scheme which was employed to 
take the New Jersey statute out of the class of com- 
pulsory acts, was the framing of alternate sections, 
under one or the other of which every contract of 
employment must come. If the parties contract in 
such a way that Section I may be applicable, the 
employer's liability is dependent on his negligence. 
The common-law defenses of "fellow-servant's 
fault" and "assumption of risk" are abolished, and 
only willful negligence on the part of the employee 
operates as a bar to his recovery against a negligent 
master. Section I, then, leaves the common-law 
criterion — "whose fault was it?" — in full force and 
effect. It merely destroys certain artificial out- 
growths of the main test, and is strictly an em- 
ployer's liability as distinguished from a workmen's 
compensation provision. 

But it was clearly not the intention of the f ramers 
that any considerable number of contracts of hiring 
should come under Section I. The inclusion of 
that section in the act was in the nature of a "sop 
to Cerberus," being intended rather to soften the 

4 See Sexton v. Newark District Telegraph Co. (1913), 86 AtL 
(N. J.) 451. 



182 WORKMEN'S COMPENSATION AND INSURANCE 

transition from the old common-law of negligence 
to the new system that practically disregards fault, 
than to furnish a permanent method of seeking rem- 
edies in accident cases. Section II is the real 
workmen's compensation act of New Jersey; and 
the clause of the statute which has made it appli- 
cable to almost all employments reads as follows : 5 

"Every contract of hiring made subsequent to the 
time provided for this act to take effect shall be pre- 
sumed to be with reference to the provisions of 
Section II of this act, and unless there be as part of 
such contract an express statement in writing, prior 
to any accident, either in the contract itself or by 
written notice from either party to the other, 
that the provisions of Section II of this act are 
not intended to apply, then it shall be presumed 
that the parties have accepted the provisions of 
Section II of this act and have agreed to be bound 
thereby. In the employment of minors, Section II 
shall be presumed to apply unless the notice be 
given by or to the parent or guardian of the minor." 

Experience has shown conclusively that the em- 
ployers' liability system provided by Section I of 
the New Jersey statute cannot compete with the 
workmen's compensation features introduced by 

*N. J. Laws 1911, c. 95, par. 9; cited Pamphlet Laws 1911, p. 136. 



HOW IT WORKS IN NEW JERSEY 183 

Section II. A vast number of contracts of em- 
ployment are and always will be entered into by the 
parties in ignorance of or without special reference 
to the particular bit of legislation applicable; and 
to all of these the compensation provisions apply 
automatically. Only by expressly stipulating that 
they do not intend to be bound by Section II can 
parties avoid such a result; and it is quite obvious 
that employers who will find their common-law 
rights greatly curtailed in that event are going to be 
very unwilling to consent to such an arrangement. 
This factor was judicially recognized in one of the 
early cases in which the act was construed, the Court 
saying : 6 

"It is optional with the master and servant 
whether the employment shall be under Section II 
of the Act or not. It is a matter of common knowl- 
edge that in this regard the person who seeks work 
is at rather a disadvantage, for unless he is willing 
to accept employment under Section II of the Act 
he will have a very small opportunity to obtain 
any." 

But the best proof that Section I has been gen- 
erally disregarded is the indisputable fact that prac- 

6 Kalisch, J., in Nitram Co. v. Creagh, 86 Atl. (N. J.) 435, at p. 
436. 



184 WORKMEN'S COMPENSATION AND INSURANCE 

tically no actions have been brought under it. 
Among the reported cases which have reached the 
higher courts of the state I was able to find in my 
early researches only two 7 in which it was at- 
tempted to bring the contract of employment under 
the unpopular section, while upwards of 100 deci- 
sions had been handed down by those same courts 
in suits brought under Section II. And the most 
reliable statistics show that the proportion of the 
total number of accidents which were brought 
under Section I by election of either employer or 
employee was only 5.8% in 1912, 5.3% in 1913, 
4% in 1914, and 2% in 1915. 8 

The State of New Jersey, then, possesses a work- 
men's compensation act which, though nominally 
optional, is conceded to be virtually compulsory 
within its field. In this respect it resembles many 
of the American statutes ; for "presumptions of ac- 
ceptance" have frequently been resorted to by wily 
legislators. 9 As a typical enactment, therefore, it 

i Kennedy v. David Kaufman Sons Co., 91 Atl. (N. J.) 99; Young 
v. Sterling Leather Works, 96 Atl. (N. J.) 1016. Even in the Ken- 
nedy case the action was not brought originally under Section I of 
the Compensation Act, but under the Death Act of 1848 (2 Comp. 
Stat. N. J. 1910, p. 1907). 

8 Reports of Employers' Liability Commission of New Jersey, 1913, 
1914, and 1915, at pages 7, 21, and 7, respectively. 

9 For instance, in Alaska, Colorado, Connecticut, Illinois, Indiana, 
Iowa, Kansas, Louisiana, Minnesota, Nebraska, Nevada, Oregon, 



HOW IT WORKS IN NEW JERSEY 185 

is worthy of careful study. We will examine its 
main provisions in some detail, and endeavor to as- 
certain how far those provisions have proven satis- 
factory in actual operation. 

(1) Employments covered. The New Jersey 
Act is more liberal in this respect than any other 
American law. 10 All private employments are cov- 
ered, except casual ones; X1 and, since 1913, all pub- 
lic employments except elective officials or at sal- 
aries exceeding $1,200 a year. 12 Farm labor and 
domestic service, which for one reason or another 
most legislatures have thought it proper to exclude 
from the operation of their compensation statutes, 
are thus subject to compensation in New Jersey, 
The innovation has not been continued without pro- 
test ; but bills to exclude domestic service from the 
act have so far failed of passage. 

The importance of having a compensation law 
extend to the widest possible range of employments 
cannot well be overestimated. If the principle is 
sound from an economic and moral point of view 

Pennsylvania, Vermont, Wisconsin, and perhaps other states. See 
texts of statutes. 

io That is, out of all the American statutes which automatically 
include employees, without the necessity of any act of election, the 
most extensive group is so included under the New Jersey law. 

nP. L. 1911, p. 144, being Section III, par. 23, of the original 
act, as amended by P. L. 1913, p. 311 (N. J. Laws 1913, c. 174).. 

12 P. L. 1913, p. 23 (N. J. Laws 1913, c. 145). 



186 WORKMEN'S COMPENSATION AND INSURANCE 

— and the preceding pages have been wasted if they 
have not demonstrated beyond all cavil that it is — 
there is no reason, in justice or expediency, for 
denying its benefits to any wage-earner. The do- 
mestic servant is as necessary a cog in our compli- 
cated social machinery as the factory -worker; the 
farmhand performs services very essential to the 
existence of the community. No employments are 
unproductive; or if they are, the public which cre- 
ates them rather than the workman who engages in 
them is to blame, and should bear the burden of 
accidents sustained therein. 

Though the New Jersey law offends less than any 
other American statute against the views just ex- 
pressed, it is nevertheless open to criticism. The 
exclusion of casual employees from its benefits, 
though supported by the precedent of the British 
Act of 1906, is indefensible in principle, and unjust 
in operation. The pernicious nature of this dis- 
tinction was illustrated by the well-known case of 
Joseph C. Gaynor, 13 arising under the Massachu- 
setts Compensation law, where the widow of a 
waiter who was killed by an accident arising out 
of and in the course of his employment was de- 

13 Gaynor v. Standard Accident Ins. Co. (1914), 217 Mass. 86, 104 
N. E. 339. 



HOW IT WORKS IN NEW JERSEY 187 

nied compensation because her husband had 
been technically a casual employee, hired by the 
job, though his employer always engaged his men 
that way. That this result was unjust, and that 
Gaynor's widow should have been spared the pov- 
erty which doubtless descended upon her, will read- 
ily be conceded ; but such a situation is not uncom- 
mon where the rule as to casual employees is in 
effect. 

It is difficult to understand what reasons, of pub- 
lic policy or otherwise, could have persuaded the 
New Jersey legislature to create the other two 
classes of exceptions to the general application of 
the act — elective officials and public employees at 
salaries exceeding $1,200 a year. Perhaps it was 
felt that the commonwealth ought to be spared the 
additional expense; but, as an able writer has 
pointed out, public employees should be included 
in any rational compensation scheme, since the pub- 
lic ought to be a model employer. 14 Nor does the 
exclusion of officials merely because they receive a 
salary of a certain size commend itself to the crit- 
ical mind. Such a man striving to rear and educate 
a family on $1,200 a year, will suffer just as much 

1* Amer. Econ. Rev., vol. V, p. 240 (June, 1915) ; Report of Work- 
men's Compensation Aid Bureau of New Jersey, 1916, p. 12. 



188 WORKMEN'S COMPENSATION AND INSURANCE 

and become just as much of a charge on the com- 
munity as his less highly paid brother. Distinc- 
tions based on such arbitrary grounds fail to take 
into account differences in the standards of living, 
in social and educational demands, which make the 
children of the departmental clerk relatively as 
helpless as the family of the injured mill-hand. 
Starvation, perhaps, is more imminent in the latter 
instance, and to that extent the need for compensa- 
tion is more imperative; but it would be a sadly 
ragged scheme which stopped at the extreme cases, 
and gave no relief to meritorious public servants or 
their dependents simply because the salaries of the 
injured before injury were sufficiently large to give 
rise to the presumption that the families were in no 
danger of immediate relegation to the bread-line. 

It is significant that all attempts further to re- 
strict the employments covered by the Act have met 
with failure. The Employers' Liability Commis- 
sion, appointed to observe and report on the admin- 
istration of the law, resolutely set its face against 
efforts from various quarters to exclude farm labor- 
ers and domestic servants in 1912 and again in 
1913; 15 basing its opposition to such exclusion on 

15 Reports of New Jersey Employers' Liability Commission for 
1913, 1914, and 1915, pages 4, 6, and 3-4, respectively. 



HOW IT WORKS IN NEW JERSEY 189 

both principle and expediency. And, despite re- 
cent agitation, it seems unlikely that there will be 
any narrowing of the statute with respect to em- 
ployments covered; while the introduction of the 
compulsory State insurance scheme which the Com- 
mission has persistently recommended, and which 
is inevitable, will in all probability silence the pres- 
ent opposition by reducing the apparent burden on 
the small employer to the insignificant obligation 
of the payment of premiums. 

(2) Occupational Disease. The time-honored 
phrase "accident arising out of and in the course of 
his employment" occurs in the New Jersey law; and 
in construing it English precedents of interpreta- 
tion have been closely followed 16 — so closely that a 
survey of the general subject in this place would be 
a mere repetition of what has been treated earlier 
in the present work. The problem of occupational 
disease, however, is always of vital interest, and the 
progress along those lines in New Jersey is worthy 
of special attention. 

Mr. Holmwood, in the preface to his handbook 

16 See Hulley v. Moosbrugger, 93 Atl. (N. J.) 79, where plaintiff 
had been injured as the result of horseplay indulged in by other 
employees. The State Supreme Court granted compensation; but 
on appeal this was reversed, the Court of Errors and Appeals quot- 
ing English cases to support its position (95 Atl. 1007). 



190 WORKMEN'S COMPENSATION AND INSURANCE 

on the New Jersey Act, refers to occupational dis- 
ease and the questions to which it gives rise as the 
greatest single problem for the courts to deal with 
in interpreting the law. 17 But it would be difficult 
to persuade the man in the street that the question 
is one properly for the courts at all. It is true that 
high-minded tribunals, more concerned with prac- 
tical justice than the natural and accepted mean- 
ings of words, have in a few instances classed rare 
occupational diseases as "accidents," and granted 
the sufferers compensation on that basis ; 18 but to 
encourage our courts in thus doing violence to com- 
mon-sense would be folly indeed. New Jersey, 
which has followed English precedents so much in 
the construction and interpretation of its compen- 
sation law, can well afford to indulge in further 
imitation by adding to its present act a schedule of 
occupational diseases for which awards will be 
made regardless of their accidental origin. In 
England such a schedule was added to the act of 
1906; and from including some six diseases or 
groups of diseases it has been extended to cover 

17 Holmwood, New Jersey Employers' Liability Law, p. 4. 

isBrintons v. Turvey, 1905 App. Cases 230 (anthrax); Thompson 
v. Ashington Coal Co. (1901) 84 L. T. N. S. 412 (blood-poisoning); 
Kelly v. Auchenlea Coal Co., (1910) S. C. 864 (pneumonia from in- 
haling gas after explosion). 



HOW IT WORKS IN NEW JERSEY 191 

over twenty-five, on successive recommendations of 
the Secretary of State. 19 

It is hardly necessary to devote space here to jus- 
tifying the policy of compensating sufferers from 
occupational diseases. Death or injury by acci- 
dent is more spectacular, but it is not more cer- 
tainly a risk of the employment. As one writer has 
said : "Every argument which can be brought for- 
ward in favor of compensation for industrial acci- 
dents, which is now acknowledged to be humane, 
applies with equal force to compensation for indus- 
trial diseases." 20 

The practical problems involved in the admin- 
istration of a compensation act covering indus- 
trial diseases as well as accidents are, however, 
numerous and confusing. As the present Commis- 
sioner of Labor of New Jersey has pointed out, 
in a very able discussion of the subject, physicians 
who have been trained to recognize symptoms of 
diseases peculiar to industrial workers are very rare, 
and the ascertainment of proper cases for awards 
would be correspondingly difficult. 21 The ques- 
tion, too, of what diseases should be reached by the 

is Report of N. J. Employers' Liability Commission, 1914, pp. 12-~- 
13. 

20 New Jersey Law Review, vol. I, p. 69 (May, 1915). 

2i Report of N. J. Employers' Liability Commission, 1914, p. 17. 



192 WORKMEN'S COMPENSATION AND INSURANCE 

compensation law, is one which will probably have 
to be settled by a compromise. 22 On principle, 
every case of a malady traceable directly or indi- 
rectly to the employment should be compensated. 
But, unless we are to follow the Germans in frankly 
accepting invalidity insurance, such an inclusive 
program is practically impossible. To ascertain 
the facts alone in individual cases ; to make sure that 
a cough was contracted in a draughty work-room 
rather than on a midnight spree ; would require in- 
calculable labor and expense, and the results would 
be doubtfully accurate at best. If we are to confine 
our awards to cases where the injury, be it accident 
or disease, can be said to arise "out of and in the 
course of the employment," the best we can do is 
to guarantee compensation in the case of diseases 
like lead-poisoning, for which the employment itself 
is obviously to blame. 

It has been stated on reliable authority that there 
are in use in the factories of New Jersey nearly 
fifty industrial poisons capable of producing seri- 
ous and even fatal disease. 23 In the hatting, 
pottery and smelting industries of the state in 
particular there are a great number of cases of 

22 Ibid., p. 19 (Letter from State Comissioner of Labor Lewis T. 
Bryant to the chairman of the Employers' Liability Commission). 

23 Report of N. J. Employers' Liability Commission, 1914, p. 18. 



HOW IT WORKS IN NEW JERSEY 193 

disability which are due directly to the occupation. 24 
Though the New Jersey legislature has passed a 
number of acts compelling the use of safety and 
sanitary appliances in factories where these dan- 
gers are incurred, none of the diseases themselves 
have been brought within the purview of the com- 
pensation statute. The omission to do so seems 
hardly defensible in view of the precedent of Great 
Britain and many of our States, and especially 
when we take into account the fact that the Em- 
ployers' Liability Commission appointed to observe 
the workings of the law has repeatedly recom- 
mended the passage of a bill making provision for 
awards to sufferers from specified industrial dis- 
eases. 

Though the conscience of the legislature does not 
appear to have been sufficiently awakened to make 
it heed the call for action on the question of com- 
pensation for industrial disease, a good work was 
done by the Employers' Liability Commission, 
working in conjunction with the Commissioner of 
Labor, in framing a bill which is recommended for 
passage. This projected bit of legislation has been 
drawn with a nice eye for the practical matters 

24 New Jersey Law Review, vol. I, p. 68 (May, 1915); American 
Labor Legislation Review, vol. V, p. 77 (March, 1915). 



194 WORKMEN'S COMPENSATION AND INSURANCE 

of administration. "Certifying Physicians," ap- 
pointed by the State Board of Medical Examiners, 
are to make the necessary examination of diseased 
employees, and issue certificates to those entitled to 
compensation. The maladies to which this pro- 
posed act applies are : 25 

1. Anthrax. 

2. Lead poisoning or its sequelae. 

3. Mercury poisoning or its sequelae. 

4. Phosphorus poisoning or its sequelae. 

5. Arsenic poisoning or its sequelae. 

6. Poison by nitro- and amido-derivatives of ben- 
zine. 

7. Poison by carbon bisulphide or its sequelae. 

8. Poison by nitrous fumes or its sequelae. 

9. Chrome ulceration or its sequelae. 

10. Eczematous ulceration of the skin produced 
by dust or liquids, or ulceration of the mucous mem- 
brane of the nose or mouth produced by dust. 

11. Compressed air illness or its sequelae. 

12. Telegraphists' cramp. 

13. Aniline poisoning. 

14. Wood alcohol poisoning. 

25 Report of the N. J. Employers' Liability Commission, 1915, pp. 
53-56. The proposed statute is entitled merely "A supplement to" 
the compensation act of 1911. 



HOW IT WORKS IN NEW JERSEY 195 

While by no means a complete list of the occupa- 
tional diseases occurring in New Jersey, this table 
probably comprehends the most prevalent and men- 
acing. It would form a splendid foundation on 
which, as experience warranted, a more ambitious 
structure could be erected ; and it is to be hoped that 
the people of New Jersey will soon force their leg- 
islators to adopt this excellent scheme which their 
Commission has devised. 

(3) The Schedule of Awards. Only second in 
importance to the question whether any awards are 
to be made at all is the amount of such awards. If 
workmen's compensation is to fulfill its destiny, it 
must do more than proffer a scanty alms to sufferers 
from industrial accidents. It must provide for 
them and their families substantially, save them 
from the degradation of the poor-house or private 
charity, and maintain them on a level higher than 
that of mere animal existence. The unfortunate 
workman's children must go to school, be properly 
clothed and fed, be trained for useful citizenship. 
His wife or widow must be spared the cruel hard- 
ships that wither women before their time. Nor 
is such a law the vision of a sociological Utopia. 
It is possible as well as desirable ; it has worked and 
is working in practical communities. 



196 WORKMEN'S COMPENSATION AND INSURANCE 

In New Jersey an elaborate schedule of compen- 
sation awards has been evolved and incorporated 
into the act and its amendments. To say that it is 
wholly unsatisfactory is to pass too harsh a criticism 
on a system which has at least been so far superior 
to that which preceded it as to have furnished about 
three and one-half times as much compensation to 
dependents of injured workmen; 26 but its de- 
fects are many and obvious, as we shall proceed 
to show. 

The subject of awards naturally divides itself 
into three heads : ( 1 ) awards in case of death ; ( 2 ) 
awards in case of total disability; (3) awards in case 
of partial disability. 27 

When a workman dies as the result of an injury 
by an accident received in the course of and arising 
out of his employment, his family is entitled, under 
the New Jersey law, to from 30 to 60 per cent, of his 
wages according to the number of dependents, sub- 
ject to a maximum of $10 and a minimum of $5 or 
full wages (if such are under $5) weekly; the same 
to be paid for a maximum period of 300 weeks. In 
addition, the employer must defray the expenses of 

26 Bulletin of the U. S. Bureau of Labor Statistics, Whole No. 126, 
p. 116. 

27 Ibid., p. 36. 



HOW IT WORKS IN NEW JERSEY 19T 

last sickness and burial, the latter not to exceed 
$100. 28 

Where not death but total disability occurs, fifty 
per cent, of the weekly wages will be paid, with the 
same maximum and minimum of $10 and $5 or full 
wages (if such are under $5) respectively; the max- 
imum period is 300 weeks, but in the case of 
permanent total disability this is raised to 400 
weeks. 29 

For partial disability, the awards are of course 
smaller, being fifty per cent, of the weekly wages 
for periods varying according to the nature of the 
injury. The maximum period during which com- 
pensation will be paid even for permanent partial 
disability is 300 weeks ; and the maximum and min- 
imum weekly payments are as before — $10 and $5 
or full wages (if such are under $5) . For loss of 
certain members a fixed schedule is provided : thus, 
for loss of an arm, fifty per cent, of wages during 
200 weeks ; for loss of an eye, fifty per cent, of wages 
during 100 weeks; etc. 30 Loss of "both hands, or 
both arms, or both feet, or both legs, or both eyes, 
or of any two thereof" is considered as constituting 

28 N. J. Laws 1911, c. 95, pars. 12 and 14(a). 

29 Ibid., pars. 11(a), (b), 14(a). 
80 Ibid., pars. 11(c), 14(a). 



198 WORKMEN'S COMPENSATION AND INSURANCE 

total and permanent disability, and is compensated 
on that basis. 31 

Compensation in no case begins until two weeks 
after injury, at the end of the so-called "waiting pe- 
riod." In the interval the employer must furnish 
reasonable medical and surgical aid, unless the em- 
ployee refuses it, but not to exceed $50 in value. 
When compensation begins, this obligation ceases. 32 

The foregoing brief summary of the present 
schedule of compensation awards in New Jersey 
will be sufficient to enable us to understand the crit- 
icisms that have been levelled against it. The 
American Association for Labor Legislation 
opened fire on it three years ago in a comprehen- 
sive arraignment which uncovered the many weak 
spots. 

At the threshold, the provision for medical at- 
tendance has been the target of unfavorable com- 
ment. The fact that the employee must accept the 
physician his employer provides, and that that 
physician is apt to be prejudiced in favor of the man 
who pays his fees are minor objections; a much 
more serious matter is the insufficiency of the pro- 
vision itself. $50, or two weeks' medical attend- 
ance, is often not enough to insure the early re- 

3i Ibid., par. 11(c). 32 Ibid., par. 14. 



HOW IT WORKS IN NEW JERSEY 199 

covery of the injured workman and his return to 
full earning capacity. This is especially true in 
the case of infection, which frequently does not be- 
come serious until more than two weeks after the 
original accident; and it is true, too, in the many 
cases where, after extended treatment, it becomes 
apparent that an operation alone will reach the root 
of the trouble. 33 In such instances the burden is 
put, very unfairly, on the injured workman and his 
family. That a more liberal provision, such as rea- 
sonable medical attendance until convalescence is 
assured and special attention becomes unnecessary, 
would not only be productive of greater justice but 
would appreciably lessen the death and disease re- 
sulting from lack of proper care of the injured, 
cannot be doubted. It is a tacit recognition of this 
truth that the State Employers' Liability Commis- 
sion repeatedly recommended, among other propos- 
als for legislation, the passage of a "provision for 
appeal to Court for additional medical services in 
exceptional cases." 34 

But far more serious than the problem of pro- 
viding medical attendance, — which, after all, is 

33 Amer. Labor Legislation Review, vol. V, pp. 64-68 (March, 
1915); also New Jersey Law Review, vol. I, pp. 63-64 (May, 1915), 

s* Report of N. J. Employers' Liability Commission, 1914, 1915, pp. 
8 and 4, respectively. 



200 WORKMEN'S COMPENSATION AND INSURANCE 

substantial, though not always sufficient, under the 
New Jersey act — are the limitations arbitrarily put 
on the amounts awarded as compensation to in- 
jured employees and their dependents. That the 
ever-alert Employers' Liability Commission was 
awake to this defect as early as March 24, 1914, 
when it gave as its opinion that "the present rates 
were fixed at too low figures" ; 35 and that the Com- 
mission has consistently recommended the substi- 
tution of 66%% of wages as a basis of the schedule 
instead of 50%, besides a general increase in the 
schedules themselves ; 36 these facts will not avail the 
State as a defense to the criticisms to which she is 
subjected for her low schedule of awards, in view 
of the cool disregard of the Commission's sugges- 
tions by the legislature. Content with being a pio- 
neer state in compensation, New Jersey has clung 
to the statistical basis adopted in the frankly ex- 
perimental days, and still deserves the sneer of the 
famous expert who calls the minimum weekly pay- 
ment in force in New Jersey and other common- 
wealths "rather a sorry comment upon the social 
conscience of States proud of their culture." 37 
In truth, the limitations with which the scale of 

35 Report for 1913, p. 3. 

36 Report for 1914, pp. 7-8; Report for 1915, p. 4. 

37 Rubinow, Social Insurance, p. 192. 



HOW IT WORKS IN NEW JERSEY 201 

compensation under the New Jersey Act has been 
hedged about, and which have made it one of the 
lowest in the country, 38 are not of the sort to earn 
for the legislators who designed them a high place 
among constructive statesmen. Take, for exam- 
ple, the death benefits, which vary from 35% of 
wages for one person dependent to 60% for six or 
more, for a maximum period of 300 weeks. In case 
of the death of a laborer earning $12 a week, with a 
widow and six dependent minor children, for in- 
stance, the award would be $7.20 a week. Such 
families on such wages as $12 are not at all un- 
common ; but they live always on the margin, and a 
sudden reduction in family income like the fore- 
going would spell misery if not starvation. The 
inadequacy of death benefits is constantly being 
recognized by the courts in granting applications to 
have the awards commuted to a lump sum, enabling 
the survivors at least for a time to keep the wolf 
from the door. 39 

Compensation for total disability is subject, as 
we have shown, to a weekly maximum of $10 and 
a minimum of $5. That it is often impossible for 
a family to sustain life on the meager allowance 

ssAmer. Labor Legislation Review, vol. V, p. 64 (March, 1915)* 
89 Ibid., p. 74. 



202 WORKMEN'S COMPENSATION AND INSURANCE 

under this law, to say nothing of enjoying reason- 
able comforts, has been proved by the investiga- 
tions of the American Association for Labor Legis- 
lation. Frank M. earned $12 a week; the compen- 
sation to which he was entitled after his injury, $6, 
was not enough even to pay for rent and food for 
his family of four. 40 John B. was totally disabled 
for five months; the $6 a week awarded to him 
under the act w r as not quite enough to pay for rent, 
food, and a fifty-cent insurance premium, and left 
no margin at all for fuel, light, clothing, and other 
necessaries for himself and his wife. Cases might 
be multiplied ; but anyone with ordinary experience 
in purchasing will understand at once that to expect 
a family to live on such a pittance as is provided 
by the "advanced" New Jersey act is preposterous. 
While in the case of death and total disability the 
extent of the misfortune makes it exceedingly diffi- 
cult to arrive at a fair estimate of the compensation 
to be granted, the same obstacles do not confront us 
in the case of injuries resulting in partial disability 
only. The normal basis of compensation in such 
cases is the estimated loss of earning power. 41 Yet 
this has been so far disregarded in New Jersey that 
a schedule of awards granting so much for loss of 

40 Ibid., p. 69. 4i Ibid., p. 73. 



HOW IT WORKS IN NEW JERSEY 203 

an eye, so much for amputation of a leg, wholly 
without reference to the effect on earning power, 
has been adopted; a system which has been said to 
have no merit save that of originality. 42 A mo- 
ment's reflection on the absurdity of granting the 
same compensation for loss of an index finger to a 
compositor and a ditch-digger, the latter of whom 
may suffer no loss of wage, while the former may 
be compelled to seek employment at a greatly re- 
duced remuneration, 43 will reveal the fundamental 
inequity of the system. 

Our stock of grievances against the New Jersey 
schedules is not yet exhausted. The limited time 
during which payments are made, especially in the 
case of so-called permanent partial disability, is 
lamentable in view of the permanence of the impair- 
ment of earning power. Dr. Rubinow has treated 
this subject with biting sarcasm in his work on 
"Social Insurance." Commenting on the action of 
the United States Employers' Liability and Work- 
men's Compensation Commission in embodying the 
feature of the New Jersey law under discussion in 
its bill for compensation of employees in interstate 
commerce, he remarks: 44 

42 Rubinow, Social Insurance, p. 194. 

43 See footnote 39. 

44 Rubinow, Social Insurance, p. 195. 



204 WORKMEN'S COMPENSATION AND INSURANCE 

"The Commission says: 'In dealing with this 
class of injuries the law should be so framed as to 
say to the injured man, "True, you have lost an 
arm, and for a considerable period of time (!) it will 
be difficult for you to engage in the labor to which 
you have been accustomed, or to acquire the ability 
to do other work ; but one-armed men are not neces- 
sarily drones, and it is your duty to become a self- 
supporting member of society as soon as you can 
do so. In the meantime you are to be taken care 
of." It is difficult to characterize this sort of 
argument when addressed to a manual laborer. 
Need the honorable Commission be told that a 
one-armed man can never engage in the labor he 
has been accustomed to, and that while one-armed 
men are not necessarily drones, they are never able 
(as wage-workers) to earn anything like the 
amount they had been earning as able-bodied men, 
and surely not to support a family?" 

Not long ago I was discussing the New Jersey 
compensation act with a mechanic employed in the 
Edison Phonograph Works. "I couldn't possibly 
live on the money I'd get under the compensation 
act," he said, "even though I have no family except 
my wife to support. I make thirty to forty-five 
dollars a week; if I were laid up, I would only get 



HOW IT WORKS IN NEW JERSEY 205 

ten, and probably most of that would go to the doc- 
tors. But it's the men with big families that get 
hit hardest." 

"What percentage of a man's wages do you think 
he ought to get in case he is laid up?" I asked him. 

"Seventy-five per cent.," he answered promptly. 
"And that means seventy-five per cent, of what he's 
earning, with no ten-dollar maximum." 

Not unnaturally, this workingman set a higher 
standard of payments than has found favor with 
most legislative bodies, who are perpetually com- 
promising between the divergent demands of cap- 
ital and labor. But it is significant that he did not 
suggest full pay, for which he would have had the 
precedent of the old Federal compensation act of 
1908. Perhaps he intuitively knew that such a sys- 
tem was demoralizing and tended to encourage 
malingering, which became a serious problem under 
the Federal act. 45 But the temptation to malinger 
is not apt to be very strong when the sick benefits 
are substantially less than wages ; and so a seventy- 
five per cent, basis would avoid this pitfall and yet 
furnish compensation at least roughly adequate in 
the average case. 

45 Bulletin of U. S. Bureau of Labor Statistics, Whole No. 155, p. 
80; also Journal of Political Economy, vol. XXIII, p. 809 (October, 
1915). 



206 WORKMEN'S COMPENSATION AND INSURANCE 

It is obvious, however, that a system as inelastic 
as that suggested by my chance acquaintance is far 
from the ideal. The number of dependents is 
taken into account in the apportionment of death 
benefits under the compensation act even now ; why, 
may we ask, is this important matter wholly over- 
looked when the employee is rendered helpless in- 
stead of being killed? Because he has a right to 
remain single and be the sole consumer of his wages, 
says the individualist. But that is not the point. 
Industrial accidents create social problems ; and it is 
the purpose of a rational compensation act to deal 
with such in proportion to their gravity. The in- 
jured workman with the six dependents presents a 
serious problem ; the bachelor's case is not so alarm- 
ing. The matter may be very simply stated ; in one 
case there are seven mouths to feed, in the other 
only one. To make the same provision for both 
workmen in amiable disregard of this obvious dis- 
tinction, is to be guilty of unutterable stupidity. 

It is not my purpose to frame an amendment to 
the New Jersey law prescribing a new and adjusted 
scale of compensation. That is a matter for expe- 
rienced actuaries to handle; the criticism indulged 
in here has been simply destructive, in the sense that 
it has sought to demolish the artificial and hap- 



HOW IT WORKS IN NEW JERSEY 207 

hazard system which was adopted by the legislature 
at a time when American experience was wanting, 
and which has threatened to become traditional. I 
have merely sought to indicate some of the things 
which must be taken into consideration in construct- 
ing a proper schedule of compensation — the possi- 
bility of living on the awards made ; the number of 
dependents of the recipient; the large proportion 
of all awards which must be exhausted under the 
present system in defraying the expenses of medical 
attention alone; etc. Perhaps already a prophet 
has arisen in Israel who will harmonize these and 
many jarring elements into an epoch-making sys- 
tem ; who will achieve that rare blend of practicabil- 
ity and justice which the legislative idealist always 
seeks but never finds. 46 

(4) Insurance Features. Until the year 1917, 
New Jersey had no provision for insurance of 
compensation awards. In this respect, as in so 
many others, it followed British precedent, and with 
unfortunate results. Suppose such a case as this, 
for example: A workman in a small tailoring es- 

46 Some idea of the scientific research which German and Russian 
compensation experts have engaged in, in the effort to formulate 
proper schedules of awards, may be gained by reading the section 
on "Amount of Compensation" on pp. 36-47 of Bulletin of U. S. 
Bureau of Labor Statistics, Whole No. 126. 



208 WORKMEN'S COMPENSATION AND INSURANCE 

tablishment is injured, and awarded compensation 
for 100 weeks. A month or two later his employer 
fails. Until the recent insurance amendments, the 
unfortunate laborer had no redress. His rights 
were merely personal ones against his employer, and 
if the latter was unable to meet his obligations, the 
injured man was the loser. There was no law com- 
pelling the employer to insure, nor to provide any 
security for the sudden demand that might at any 
time be made on him by the death or serious injury 
of a workman. A small employer might easily be 
ruined by being forced suddenly to pay compensa- 
tion to a number of claimants after a disaster like a 
fire, the explosion of a boiler, or some similar acci- 
dent. It is true that a sagacious man would pro- 
vide against such calamities by insuring his work- 
men ; but men love to take a chance, and so long as 
there is no compulsion exerted hundreds of em- 
ployers will continue the penny-wise, pound-foolish 
policy of saving on premiums and trusting to Prov- 
idence that no accidents will occur. If such em- 
ployers alone were to suffer thereby, the community 
might well afford to leave them to their own folly; 
but unfortunately it is the injured workmen who 
bear the brunt of such mistakes on the part of their 
superiors. 



HOW IT WORKS IN NEW JERSEY 209 

If the financial collapse of industrial establish- 
ments were a rare occurrence, the problem pre- 
sented by the original New Jersey law to which I 
have referred, would not have loomed large among 
compensation questions. But the complete ship- 
wreck of even large industrial enterprises is a hap- 
pening which is too common to excite even passing 
interest. In 1912 sixty-six manufacturing estab- 
lishments in New Jersey closed permanently. 47 
The mortality among small employers, particularly 
retail dealers with two or three employees, is tre- 
mendous, as anyone familiar with bankruptcy court 
practice will testify. In some lines of business, as 
the building trades, the workmen are largely em- 
ployed through sub-contractors, whose financial ir- 
responsibility makes it exceedingly difficult to col- 
lect compensation when legally due. 48 If we add 
to this that even in cases where an employer volun- 
tarily insured his employees, the latter had no legal 
claim to the insurance money, which went to re- 
ceivers for the benefit of general creditors, in the 
event of the employer's bankruptcy, we will have 
no difficulty in understanding why, in 1915, com- 
pensation which was legally due was not paid in 

47 Bureau of Statistics of New Jersey, 36th Annual Report, pp. 
258-259. 

48 Amer. Labor Legislation Review, vol. V, p. 63 (March, 1915). 



210 WORKMEN'S COMPENSATION AND INSURANCE 

199 cases of non- fatal accidents, or 3.1% of the 
total; and in 21 cases, or 12.4% of the total of fatal 
accidents. 49 

The class of claimants which suffered most under 
the New Jersey act from the absence of insurance 
features in the law was, of course, that which is com- 
posed of injured workmen or their dependents to 
whom awards had been made of payments continu- 
ing for an extended period. These individuals, it 
may be noted, are those who in general feel the 
greatest need of compensation; among them are 
those maimed for life, the minor children of deceased 
laborers, and destitute widows. Under the system 
of weekly payments, compensation may be spread 
over a period of six or seven years. During such 
a period, an industrial establishment might suffer 
many reverses of fortune ; it might fail and leave the 
claimant stranded, with but a fraction of the legal 
compensation paid. The injustice of such a situa- 
tion is too obvious for comment. 50 

The final adoption in New Jersey in 1917 of a 
system under which insurance or some other secur- 
ity for awards is required of employers, w T as far 
from a revolutionary move. On the contrary, that 

49 Report of N. J. Employers' Liability Commission, 1915, pp. 7-8. 
so See ibid., pp. 32-40 inclusive, in which the Commission strongly 
recommended compulsory State Insurance. 



HOW IT WORKS IN NEW JERSEY 211 

action had the sanction of most of the precedent in 
the United States. Of the thirty-eight states and 
three territories having workmen's compensation 
acts in force at the present writing, nearly three- 
fourths require insurance or proof of financial re- 
sponsibility on the part of employers coming under 
the act by choice or otherwise; and in most of the 
exceptional states the principle of insurance is 
recognized to the extent of prescribing regulations 
for the conduct of such insurance as employers may 
voluntarily assume. Only in Alaska and Arizona 
to-day have the legislatures been so blind to the 
practical aspects of the compensation question as 
to make no provision at all for securing awards. 50a 
(5) Administration by the Courts. What were 
the motives which led the legislature that passed the 
act of 1911 to leave the administration of the statute 
to the courts ? Conservatism, perhaps, which trusts 
the courts above all other human agencies ; possibly 
economy, for the creation of a special machinery to 
enforce the act would unquestionably have been ex- 
pensive; or it may have been that a Senate and 

soa In both of those places, an employer may under certain circum- 
stances file security and stay judgment; but this is of course not 
"securing compensation" in the sense of the text, as it is done after 
the injury. Alaska Laws 1915, c. 71, sees. 10-13; Ariz. Laws 1912 
(codified by Senate Bill No. 70, Extra Session 1913), sec. 3173. 



212 WORKMEN'S COMPENSATION AND INSURANCE 

Assembly composed so largely of lawyers regarded 
with an unfriendly eye any scheme which would 
turn over to administrative commissions or officers 
cases which have long been regarded as the legiti- 
mate spoil of the legal profession. Whatever the 
influences which swayed the law-makers, however, 
the legislation of 1911 is not in harmony with pres- 
ent tendencies. In more than two-thirds of the 
compensation states, including most of those whose 
acts have been passed in the last two or three years, 
some administrative body — an Industrial Accident 
Board, State Insurance Commission, or other com- 
mittee of officials — has the lion's share of the active 
authority. 51 

Radical changes in the administrative machinery 
of the New Jersey compensation law were intro- 
duced by the legislature of 1918. To the new 
scheme we shall presently have reference; but as 
this chapter is primarily a review of New Jersey 
experience, the merits and demerits of the system 
hitherto in force will first be discussed. Merely to 
say that the New Jersey practice did not conform 
with the usage of other states does not, to my mind, 
condemn it. The popular tendency is sometimes 
the wrong tendency. It will be worth our while 

BiReport of N. J. Employers' Liability Commission, 1914, p. 42. 



HOW IT WORKS IN NEW JERSEY 213 

to weigh the advantages and demerits of the method 
of court administration, as presented by the re- 
spective champions of the court and commission 
systems, before passing judgment. 

When a workman was injured in New Jersey by 
an accident arising out of and in the course of his 
employment, there was first an attempt at an ami- 
cable settlement. In the vast majority of cases 
this was successful; for the schedule of awards had 
at least the merit of being definite, and the extent 
of the liability of the employer was generally obvi- 
ous. In cases of dispute, the matter was referred 
to the Court of Common Pleas of the county in 
which the accident occurred; the Judge heard the 
testimony and decided in a summary manner on the 
law and the facts. An appeal to a higher tribunal 
could be taken for errors of law only. 52 The pre- 
scribed compensation according to the schedules of 
the act had to be paid if the employer was found 
liable at all ; agreements between employer and em- 
ployee for irregular compensation were unenforce- 
able, 53 and a Judge who awarded more or less than 
the statute allowed was acting in excess of his pow- 
ers. 54 Common Pleas Judges were authorized to 

52 N. J. Laws 1911, c. 95, pars. 18, 19, 20. 

53 Ibid., par. 20. 

54 Ibid. See also Report of N. J. Employers' Liability Commis- 



214 WORKMEN'S COMPENSATION AND INSURANCE 

commute awards to lump payments when such ac- 
tion seemed advisable. 55 

Such was the system of "court administration" in 
force in New Jersey until the amendments of the 
current year. What it really was is this : a system 
of voluntary adjustments, with the courts as a last 
resort in cases of dispute. Cases found their way to 
the Common Pleas either (1) because of non-agree- 
ment; (2) because of non-payment; (3) upon a 
petition for. commutation of a claim to a lump sum. 
It has been estimated that more than half of them 
were brought in for the last-named purpose. 56 So 
when we find that out of the total number of com- 
pensation cases only 6.8% found their way to the 
courts in 1913, 6.Q% in 1914, and 5.5% in 1915, 57 
one of the common criticisms of the New Jersey 
act — that it encouraged litigation, the very thing 
a compensation act should be framed to avoid — 
seemed hardly warranted by the facts. 

The most comprehensive indictment of the court 
method is that framed by the American Association 
for Labor Legislation in its report of Three Years 

sion, 1915, p. 10, where this comment is made on a case: "Court re- 
fused compensation, doing something strictly forbidden." 

55 N. J. Laws 1911, c. 95, par. 21. 

56 Amer. Labor Legislation Review, vol. V, p. 40 (March, 1915). 

57 Report of N. J. Employers' Liability Commission, 1913, 1914, 
1915, pp. 9, 31, and 27, respectively. 



HOW IT WORKS IN NEW JERSEY 215 

under the New Jersey Workmen's Compensation 
Law, published in March. 1915. The very figures 
I have just quoted are cited by the ingenious com- 
pilers to show, not that peaceful and equitable set- 
tlements are the rule, but that workmen whose 
claims have been improperly adjusted kept away 
from the courts because of delay and expense, fear 
of and unfamiliarity with their procedure, and the 
advantage which the wealthy employer had in those 
tribunals. "As a result," it is said, "there was no 
supervising authority to see that the vast majority 
of claims were properly adjusted" — a conclusion 
which is undeniable, but which did not entail such 
hardship on the injured employee as is implied; for 
he could always go into court and recover the bal- 
ance due him, and often did so, as some of the very 
cases cited by the Association show. 58 

The opponents of the court method have grouped 
their objections to the system under three heads: 
( 1 ) The delay of court procedure ; ( 2 ) The cost of 
court procedure; (3) The unfitness of courts for 
the settlement of compensation claims. 59 As sta- 
tistics and instances have in each case been brought 
forth in support of the contentions, the whole con- 

ss Amer. Labor Legislation Review, vol. V. pp. 58-61 (March, 
1915). 

59 Ibid., p. 40. 



216 WORKMEN'S COMPENSATION AND INSURANCE 

stitutes an interesting critique of the act of 1911 
which is worthy of discussion here. 

The most important of the three alleged de- 
fects appears to be that of delay. In most cases, 
as we have seen, awards have been made amica- 
bly by the employer on determining the nature 
and extent of the injury; but there were enough in- 
stances in which no voluntary settlement could be 
reached to keep the courts busy. An examination 
by one investigator of 72 cases of fatal injuries 
taken to the courts during the year 1913 showed that 
the average time elapsing between the date of the 
accident and the date of the award was twenty-seven 
and a half weeks, while in only five cases had any- 
thing been paid the petitioner before the award 
was made. 60 Among 232 non-fatal cases during 
1914, the average time elapsing between accident 
and award was thirty-seven weeks and one day. 
The period of delay was often so long that benefits 
were not paid until the injured workman had re- 
covered and returned to work; for example, of 53 
awards for temporary total disability made by the 
courts during 1913, fifteen were for disabilities 
which had already ceased. 61 

It is evident that this constituted a very real prob- 

eo Ibid., p. 41. 6i Ibid., p. 43. 



HOW IT WORKS IN NEW JERSEY 217 

lem. Relief delayed is often no relief at all; and 
where the injured laborer is living on the margin, 
the long delays which a disputed award entails may 
plunge him deep into debt or bring him to actual 
starvation. There is little doubt that administra- 
tion by a commission with summary powers, which 
was earnestly advocated by the minority of the 
Employers' Liability Commission, in one of its re- 
ports, 62 makes for improvement in this respect. 
Whether the resulting decisions in contested cases 
are as just and able or not is a question on which 
the respective champions of court and commission 
methods differ. 

In almost all cases of disputed awards under the 
act of 1911, the claimant was represented in court 
by a lawyer. 63 This has been criticized as entailing 
a large expenditure on the petitioning workman, 
and lessening the compensation recovered by a dis- 
proportionately large amount. Yet the law made 
every effort to protect the employee by making 
the attorney's fees subject to the approval of the 
court; 64 and, though in exceptional cases a ridicu- 

62 Report of N. J. Employers' Liability Commission, 1914, p. 48 
(minority report of John T. Cosgrove and S. Botterill, the two mem- 
bers of the Commission representing Labor). 

es Amer. Labor Legislation Review, vol. V, p. 44 (March, 1915). 

64 N. J. Laws 1911, c. 95, par. 21. 



218 WORKMEN'S COMPENSATION AND INSURANCE 

lously large proportion of the award was eaten up 
in lawyers' charges, in one case 38 %, 65 in the vast 
majority of instances this item was not a large one, 
the average, according to the figures of 1915, being 
roughly 5.7% of the total compensation awarded. 66 
Perhaps the worst thing that can be said of the cost 
of litigation is that it tends to keep small claims 
from the courts, for a lawyer cannot afford to give 
his time for the three or four days which may be 
required to fight a case when the fee will be $10 or 
less. And, since the ordinary workman has no 
money, his case must ordinarily be taken on a con- 
tingent basis, so that his chances of getting first- 
class counsel are small compared with the employ- 
ers, who are prepared to pay the fees in any event. 
The so-called "unfitness of the courts for the set- 
tlement of compensation claims" has been made 
much of by certain critics. A joint committee of 
the National Civic Federation and the American 
Federation of Labor, which visited the various 
states having compensation acts in operation in 
1913 and published its report as a United States 
Senate document, 67 calls attention to the fact so 
often commented on by the Employers' Liability 

65 Amer. Labor Legislation Review, vol. V, p. 45 (March, 1915). 

66 Report of N. J. Employers' Liability Commission, 1915, p. 28. 

67 No. 419, 63d Congress, 2d Session. 



HOW IT WORKS IN NEW JERSEY 219 

Commission of the large number of cases not re- 
ported in New Jersey, and says: "From informa- 
tion received by this Commission, it seems probable 
that not over 60 per cent, of the amounts payable 
under the New Jersey statute are being paid. The 
opportunity for fraud exists, fraud that is difficult 
to detect. This condition could not exist in a State 
having an industrial accident board with power to 
approve all settlements and follow up the payments 
and see that they are made in full." The conclu- 
sion of the American Association is similar: "Ob- 
servation of the settlement of claims through the 
court seems to show that their very nature tends 
to make them unfit for the settlement of compensa- 
tion cases." * 8 The two labor members of the New 
Jersey Employers' Liability Commission, in their 
minority report submitted in 1914, take the same 
view: "We are convinced as a result of close ob- 
servation and long and careful consideration of the 
subject that it is a mistake to place the administra- 
tion of a workmen's compensation law in the hands 
of the courts. We are of the opinion that adminis- 
tration through a commission of three paid mem- 
bers, with summary powers, would prove to be more 
satisfactory because more efficient, and that such 

68Amer. Labor Legislation Review, vol. V, p. 47 (March, 1915). 



220 WORKMEN'S COMPENSATION AND INSURANCE 

administration would be most truly economical in 
the long run." 69 

The specific objections urged to show the unfit- 
ness of the courts for compensation settlements are 
in some cases worthy of careful consideration. For 
instance, it is said that judges have usually little 
knowledge of industrial processes and neither time 
nor opportunity to become specialists in compen- 
sation law. The answer that would probably be 
given to this is that where compensation cases 
occupy an important place in the daily business of 
a common pleas judge, he has every incentive to 
familiarize himself with all the aspects of the prob- 
lem. If such a functionary had only occasionally 
to do with this branch of law, the objection would 
be serious; but the reports for 1915 showed cases 
in all but one of the 21 common pleas courts in the 
state, and in Essex and Hudson, the two most 
populous counties, over sixty cases apiece. 70 In 
actual practice, though, the courts do not seem to 
have justified this ideal of self -education ; and the 
American Association for Labor Legislation pre- 
sents an appalling array of mistakes due to mis- 
interpretation of the law and direct transgression 

69 Report of N. J. Employers' Liability Commission, 1914, p. 41. 

70 Report of N. J. Employers' Liability Commission, 1915, p. 27. 



HOW IT WORKS IN NEW JERSEY 221 

of it. Through the vigorous intermediation of the 
Employers' Liability Commission and the wisdom 
that comes only with experience, these mistakes 
have been vastly reduced; so that, while 207 cases 
of irregular or faulty compensation were reported 
for 1913, and 169 in 1914, there were in 1915 only 
27 such irregularities 71 — a very small number. It 
is doubtful if even a paid and expert Commission 
could greatly improve on the record of this latter 
year, especially when it is considered that the 27 
irregularities were some of them- of a trifling na- 
ture; but judges shift with politics, and it is cer- 
tainly safer in the long run to have trained and 
tried men in permanent command of this phase of 
compensation administration than to leave all to the 
chance of having judicial incumbents of the requi- 
site experience and temperament. 

An objection to the court method of administra- 
tion which cannot fail to strike anyone who is famil- 
iar with the operation of compensation and liabil- 
ity laws is the fear which the employee often feels 
that a court appeal will cost him his employment. 
Though often unfounded, this fear is undoubtedly 
inspired in many instances by employers or their 
representatives, and cases are on record in which dis- 

7i Ibid., p. 7. 



222 WORKMEN'S COMPENSATION AND INSURANCE 

charge has actually followed on an injured work- 
man's attempt to obtain compensation legally due 
him. 72 This feature, deplorable in the cynical com- 
ment on human nature which it constitutes, is not, 
however, a weakness peculiar to court-administered 
acts, but is equally present in all compensation and 
liability laws which provide for direct collection of 
benefits from the employer. Whether court, com- 
mission, board, or single official is to hear the case 
and decide the question of the employer's liability 
and its extent, unscrupulous employers will always 
be eager to prevent the issues from ever being pre- 
sented for determination, and will use that silent in- 
fluence which the lord of labor always has over those 
dependent on his favor for their jobs, to keep the 
workingman from his due. There is only one ef- 
fective way of destroying this practice utterly, and 
that is by forcing the employer to insure, so that 
when compensation is to be paid it does not come 
directly out of his pocket, but affects him so re- 
motely that the motive for impeding the course of 
justice is gone. 

That the multiplicity of tribunals in New Jer- 
sey in which workmen's compensation cases might 
be tried, and may still be tried on appeal under 

72 Amer. Labor Legislation Review, vol. V, p. 56 (March, 1915). 



HOW IT WORKS IN NEW JERSEY 223, 

the amendment of 1918, tends to create confusion 
through conflict of judicial decision, is undoubtedly 
true. There are twenty-one common pleas courts 
in New Jersey, one for each county ; and unless and 
until points of interpretation of the act receive au- 
thoritative attention from the higher tribunals of 
the State, the decisions of each court are binding 
precedents in the local forum. The construction of 
the clause stating that "every contract of hiring 
made subsequent to the time provided for the act to 
take effect" is presumed to come under the act, is a 
shining example of the conflict of judicial decisions 
resulting from the system. Some courts held that 
the law applied only in case the contract of hiring 
was entered into in the state; others were equally 
emphatic that the place where the work was done, 
and not where the employment contract was made, 
was the determining question. 73 

The court method has its defenders. For the 
most part these are conservatives who resent the in- 
creasing intrusion of administrative commissions 
into the field of judicial activity. Thus, no less 
an authority than Mr. Bradbury has characterized 
the system as "entirely adequate," and goes on to 
say: "So far as the disclosures made up to the 

73 Ibid., pp. 52-53. 



224> WORKMEN'S COMPENSATION AND INSURANCE 

present time are concerned, the evil which is to be 
met, does not seem to justify the elaborate and ex- 
pensive system which has been established in New 
York to meet it. As employees become more and 
more familiar with the law, cases of inadequate 
payment will be found very rare, under the rule in 
New Jersey where any agreement can be examined 
and set aside on the ground merely that the pay- 
ments are not as great as the statute required." 74 
A very recent amendment to the New Jersey 
compensation act — Chapter 149 of the Laws of 
1918 — creates a Workmen's Compensation Bu- 
reau. At first sight this new body seems to be a 
counterpart of the administrative commissions at 
work in so many states ; but an examination of the 
statute shows that the curious reluctance of the 
New Jersey legislature to abandon the court sys- 
tem has manifested itself in an awkward compro- 
mise. Judges of the Common Pleas may still take 
testimony and decide cases, though only after the 
Bureau has failed to satisfy the parties. The de- 
tails of this remarkable scheme will be discussed at 
the close of this chapter under the heading "The 
New Administrative Machinery" ; but before pass- 

74 Bradbury, Workmen's Compensation and State Insurance Law 
<2d Ed.), p. 794. 



HOW IT WORKS IN NEW JERSEY 225 

ing to this topic it will be instructive to study two 
earlier creations of the legislature — the Employers' 
Liability Commission and the Workmen's Compen- 
sation Aid Bureau. 

(6) The "Commission" and the "Bureau" 
Though, as we have shown, no official machinery for 
taking the administration of the compensation act 
out of the hands of the courts was attempted to be 
created in New Jersey prior to 1918, and the ex- 
ecutive work devolved upon the judicial tribunals 
already established for other purposes, two auxil- 
iary bodies were created at different times by stat- 
ute to render a sort of unofficial assistance to the 
ministers of justice. The first of these was the 
Employers' Liability Commission, to whose activi- 
ties we have already had occasion to refer ; and the 
second, which took the place of the Commission, 
was the Workmen's Compensation Aid Bureau. 

The Employers' Liability Commission, to be 
composed of "six citizens, at least two of whom shall 
be representatives of organized labor," appointed 
by the Governor and serving without pay, was 
created in 1911, 75 the year of the passage of the 
compensation act itself. Its duties were at first 
vaguely defined, being "to observe in detail, so far 

75 N. J. Laws 1911, c. 241. 



226 WORKMEN'S COMPENSATION AND INSURANCE 

as possible, the operations throughout the State" 
of the Workmen's Compensation law. The re- 
sults of this observation, together with any sugges- 
tions or recommendations which the Commission 
might make, were to be embodied in an annual re- 
port. A subsequent statute, passed in 1912, re- 
quiring employers, insurance companies, etc., to 
make reports of industrial accidents to the Commis- 
sioner of Labor, provided that the Commission 
should have free access to these reports, and relieved 
it of the obligation of duplicating them; and an 
amending act was also passed in 1913. 

The actual work of the Employers' Liability 
Commission cannot be spoken of too highly. Its 
reports, published annually up to 1916, con- 
tained the careful statistical compilations to which 
every student of the New Jersey compensation 
act must turn for information. Many a case 
which threatened to develop into a long strug- 
gle in the courts, with expense to both employer 
and employed, was settled amicably through the 
intervention of the Commission. Irregular cases 
were made to conform with the law through cor- 
respondence; thus, the report for 1915 contains a 
list of 57 such irregularities which were adjusted 
through the beneficent action of the Commission, 



HOW IT WORKS IN NEW JERSEY 227 

and 13 cases in which it tried and failed. 76 Besides 
this eminently practical field work, the members 
took a very active interest in the drafting of legisla- 
tion to remedy some of the defects in the present law 
which we have pointed out ; and in this the Commis- 
sion as a whole, and the two labor members in par- 
ticular, showed themselves progressive and sanely 
constructive. Among the laws recommended in the 
last report and submitted to the legislature for con- 
sideration w T ere : an act creating a Workmen's Com- 
pensation Aid Bureau in the Department of Labor 
(which was passed with slight changes by the legis- 
lature of 1916) ; a compulsory insurance act, creat- 
ing also a State Insurance Fund ; an act revising the 
schedule of awards on a 66% % basis, and providing 
for more thorough medical attention ; and an act in- 
cluding specified occupational diseases among the 
disabilities for which compensation is payable. 77 
The minority of the Commission, being the two 
labor members, also expressed themselves in favor 
of administration by a paid Commission of three 
members with summary powers. 78 

By legislation of 1916 the mantle of Elijah was 

76 Report of N. J. Employers' Liability Commission, 1915, pp. 20- 
23. 

7T Ibid., pp. 28-31, 32^0, 42-52, 53-56 inclusive. 

78 Report of N. J. Employers' Liability Commission, 1914, p. 48. 



228 WORKMEN'S COMPENSATION AND INSURANCE 

made to descend on new shoulders. Though not 
expressly repealing the act creating the Employ- 
ers' Liability Commission, the statute which called 
into being the Workmen's Compensation Aid Bu- 
reau 79 made that intent so clear in its delegation of 
the Commission's powers to the new body, and its 
proviso that inconsistent laws are "hereby re- 
pealed," that the extinction of the predecessor may 
be deemed accomplished. The purposes for which 
the Bureau was organized were briefly stated in a 
letter to the author from Mr. W. E. Stubbs, who 
acted as its secretary, as he had of the Commission 
which preceded it. He wrote : 80 

"The main object of this Bureau is to review 
all settlements as reported by employers or insur- 
ance carriers, and to furnish an approval to both 
employer and employee, if the settlement is found 
to be entirely in harmony with the Statute, and fail- 
ing to accomplish this, the Bureau is authorized to 
certify a state of facts to the Court of Common 
Pleas, which Court will assign counsel to represent 
the injured person, and in the event of an award in 
favor of the employee, this counsel's fee may be 
charged against the employer, who is without legiti- 

79 N. J. Laws 1916, c. 54. 

so Letter dated Trenton, N. J., July 26, 1916. 



HOW IT WORKS IN NEW JERSEY 22& 

mate excuse for delay, or failure to pay adequate 
compensation. It is our hope, through these activi- 
ties, to bring about a satisfactory administration of 
the compensation law in this State." 

Elsewhere in this letter Mr. Stubbs described the 
make-up of the Bureau: "The Workmen's Com- 
pensation Aid Bureau, in addition to the Hon. 
Lewis T. Bryant, Commissioner of Labor, as its 
head, is composed of Mr. W. E. Stubbs, Secretary, 
and Messrs. Geo. J. Jaeger and Harry J. Goas, as 
referees, appointed for the purpose of visiting vari- 
ous cities on stated days, in order to render aid 
wherever same may be of service, by giving advice 
to employers and employees, or in assisting insur- 
ance companies in adjusting matters with injured 
persons. Anyone desiring information can secure 
same from the representatives without charge." 

After the letter from which I have just quoted 
was written, the Bureau published its report for 
the year 1916. In a later communication to me, 
Mr. Stubbs, the Secretary, said he found it "neces- 
sary to explain that owing to meagre appropria- 
tions on the part of the Legislature, I have never 
been able to carry a force sufficient to enable me 
to do many things which are accomplished by 
[Bureaus in other states. One of these is the pub- 



230 WORKMEN'S COMPENSATION AND INSURANCE 

lishing of decisions of the courts, and other matters 
pertaining to our work, which would be of interest 
to the general public. The only thing which has 
been issued is the annual report for the year 
1916." 81 

The apology seemed hardly needed. The Work- 
men's Compensation Aid Bureau was created by 
act of March 15, 1916; the task of organizing, 
adopting methods, designing of blanks, forms, etc., 
and enlightening employers and the general pub- 
lic as to the purpose and powers of the Bureau, had 
then to be accomplished before effective routine 
work could be begun. The excellent results at- 
tained during the brief remainder of the year were 
a credit to the members of the Bureau, and quite 
overshadow the doubtful disadvantage which the 
public sustains through the absence of the volumi- 
nous reports of cases and other literature which 
state commissions take such universal delight in 
producing. 

The legislative recommendations of the Bureau, 
like those of its predecessor, the Employers' Liabil- 
ity Commission, were of a progressive sort. As a 
study of the Act, and the making of suggestions for 
its improvement, were among the duties with which 

*i Letter dated Trenton, N. J., September 5, 1917. 



HOW IT WORKS IN NEW JERSEY 231 

the Bureau was specifically charged by the statute 
creating it, these recommendations are especially 
significant. Among them are: a reduction of the 
waiting period to one week ; the inclusion within the 
provisions of the Act of state, county, municipal 
and other public employees receiving salaries in ex- 
cess of $1,200 a year; the increase of compensation 
rates to sixty-six and two-thirds per cent, of wages, 
and of the minimum and maximum weekly pay- 
ments to $6 and $12; the investing of authority to 
make actual awards in controversies in the Bureau's 
referees; compulsory insurance or security of pay- 
ments (now happily secured by the amendment of 
1917) ; and many minor alterations. 82 

The Bureau took up the work of reviewing both 
fatal and non-fatal cases where the Employers' 
Liability Commission laid it down; and the year 
1916 shows a substantial increase in the number of 
successful adjustments made. A corresponding 
decrease in the number of petitions to the courts is 
observable, and is highly creditable to the Bureau, 
which during its brief existence made every effort 
to combat the vicious effects of litigation of com- 
pensation claims. 83 

82 Report of Workmen's Compensation Aid Bureau, 1916, pp. 6-12. 

83 Ibid., p. 18. 



232 WORKMEN'S COMPENSATION AND INSURANCE 

The work of the referees was perhaps potentially 
the most important of all. During the four months 
of July to October, 1916, 1049 individuals appeared 
before Messrs. Jaeger and Goas, information and 
advice were given in 262 cases, 118 cases were set- 
tled, and 132 hearings granted. 84 The referees 
were handicapped by lack of power to make awards 
and commutations, the method of certifying dis- 
puted cases to the Court of Common Pleas result- 
ing in delays and dissatisfaction. Another need 
very strongly felt was that of the services of a 
special physician for the Bureau, to assist the ref- 
erees in cases of dispute as to the permanence of 
injuries, the extent of particular disabilities, etc. 
Despite imperfections in the administrative ma- 
chinery, however, the work of imparting informa- 
tion, harmonizing conflicting interests, hastening 
the slow course of justice, and saving attorneys' fees 
and court expenses for both parties to controver- 
sies, went on very satisfactorily under the Bureau's 
direction. 

(7) The New Administrative Machinery. We 
have seen that the comparative merits of the court 
and commission systems have been the subject of 
heated controversy for some years. It might have 

84 Ibid., pp. 19-20. 



HOW IT WORKS IN NEW JERSEY 233 

been supposed, therefore, that one scheme or the 
other would presently triumph, and be adopted un- 
reservedly by the legislature. Instead, the New 
Jersey Assembly of 1918 has seen fit to enact into 
law an awkward compromise that can hardly be sat- 
isfactory to either faction, and preserves the faults 
of both rival systems so meticulously that it holds a 
unique place among legislative acts. 

This 1918 provision, which is in the form of an 
amendment to the original law of 1911, purports 
to turn over to a Workmen's Compensation Bureau 
that exclusive original jurisdiction over compensa- 
tion claims which was exercised by the Courts of 
Common Pleas. This provision, however, is prac- 
tically nullified by a further clause permitting 
either party, if dissatisfied with the findings of the 
Bureau, to appeal the judgment to that very Court 
of Common Pleas which is elsewhere deprived of 
original jurisdiction; trial on appeal — and this is 
the astounding part — to be de novo, with the same 
right to produce and examine witnesses and present 
other testimony that existed at the original hearing. 

The new law is big with possibilities of discord 
and confusion. An employer unsuccessful before 
the Bureau will be tempted to appeal, and by some 
new twist of the evidence, in which he will have the 



234 WORKMEN'S COMPENSATION AND INSURANCE 

advantage because of his ability to secure the serv- 
vices of expensive counsel, throw his opponent out 
of court. On the other hand, because of the power 
of the court to tax costs and attorneys' fees on the 
unsuccessful partjr, the injured employee will 
ordinarily be afraid to appeal. Discrepancies will 
arise between the evidence before the Bureau and 
the evidence in the new trial, and time will be 
wasted haggling over them. Since the compensa- 
tion cases before the Judges of Common Pleas will 
be relatively fewer, the danger of having men 
charged with the administration of compensation 
claims who are unacquainted with industrial condi- 
tions and even with the branch of law to which the 
controversies belong, will be greatly increased. 

What the New Jersey legislature has actually 
done has been, not to turn over the effective admin- 
istration of the compensation law to a specially ap- 
pointed commission, but to give some color of legal 
sanction to what is essentially a system of volun- 
tary settlements — merely to extend, in short, the 
sphere of influence formerly possessed by the 
Workmen's Compensation Aid Bureau. That 
body was empowered to pass upon the validity of 
agreements for compensation entered into between 
the parties, and to initiate proceedings where the 



HOW IT WORKS IN NEW JERSEY 235 

injured employee or his dependents neglected to do 
so; and all that is added in the creation of the new 
Bureau is the power to go through the form of a 
trial and make a finding which the parties are at 
liberty to disregard. It is true that the statute 
speaks of vesting in the Bureau jurisdiction for- 
merly possessed by the Courts of Common Pleas, 
and denominates the action of a party in refusing 
to concur in that body's conclusions and demand- 
ing a judicial hearing an "appeal." Looking 
through the form to the substance, however, it will 
be seen that the original jurisdiction of the courts 
of law is left intact ; and the only substantial change 
from preexisting methods is that there is thrown 
upon the state authorities, in every instance where 
a party chooses to make trouble, the unnecessary 
burden of a second investigation into the facts. 

The details of the new scheme are not of espe- 
cial interest, and will be disposed of briefly. The 
membership of the Bureau includes the Commis- 
sioner of Labor, three deputy commissioners, and 
such referees or other employees as may, in the 
judgment of the Commissioner, be necessary. 
(Sec. 1.) Its "exclusive original jurisdiction," so- 
called, is to be exercised by these officials "sitting 
individually or together." (Sec. 3.) An agree- 



236 WORKMEN'S COMPENSATION AND INSURANCE 

ment between the injured employee and his em- 
ployer for compensation may be filed, within 
twenty-one days after the accident, with the Bureau, 
and if approved by it becomes binding on the par- 
ties; where there is a failure to file or secure ap- 
proval of such an agreement, the Bureau is to en- 
deavor to bring about a settlement of the claim, 
filing a petition on its own initiative, with the con- 
sent of the injured workman or his dependents, 
where he or they have neglected so to do. ( Sec. 4. ) 
In this latter case, or in the case of the petition be- 
ing filed by the proper party within one year from 
(1) the date of the accident, or (2) failure of the 
employer to pay according to the terms of an agree- 
ment, or (3) last payment (where one or more pay- 
ments have been made), a time is to be fixed for 
hearing before the Commissioner of Labor, a dep- 
uty, or referee, within a stated period after service 
of the petition upon the employer and the Secre- 
tary of the Bureau, the place of hearing to be either 
in the county where the injury occurred, or where 
the petitioner resides, or in which the defendant was 
served with process, or where defendant's place of 
business is located. (Sec. 5-7.) 

The proceedings in a case before the Bureau are 



HOW IT WORKS IN NEW JERSEY 237 

of a summary nature. Both parties may produce 
evidence exclusive of ex parte affidavits; but the 
official conducting the hearing is not to be bound 
by the rules of evidence. (Sec. 9.) The Bureau 
has the power to modify awards or permit commu- 
tation thereof. (Sec. 10.) Subpoenas, witness 
fees, the allowance of costs, taking of depositions 
of absent witnesses, and other legal formalities are 
provided for. (Sees. 8-18.) From the Bureau's 
decision, however, the "appeal" to the Court of 
Common Pleas, already described, may always be 
taken, and an entire new trial had. (Sec. 19.) 
The Act creating the Workmen's Compensation 
Aid Bureau is repealed. (Sec. 22.) 

If the 1918 Amendment were itself amended so 
as to do away with the provision for a trial de novo 
by the Court of Common Pleas, and permit appeals 
to the proper tribunals on questions of law only, it 
would commend itself to those who have made the 
most careful study of compensation experience, and 
be in harmony with the best tendencies of the day. 
That part of the Act which bestows judicial pow- 
ers upon the Bureau is in itself good ; and it is only 
insofar as the statute is emasculated by the pro- 
visions permitting nullification of the Bureau's de- 



238 WORKMEN'S COMPENSATION AND INSURANCE 

cision and a wasteful re-threshing of the whole case 
by a law court, that it deserves crushing criticism. 

The author's views, as well as the facts, with 
regard to all the important outstanding features 
of the New Jersey Workmen's Compensation Act 
have been set forth at some length in the forego- 
ing pages. 85 The minor problems, and some of 
those common to American compensation legisla- 
tion — such as the "waiting period," extra-territo- 
rial effect, etc. — have been given more general 
treatment elsewhere. 

85 For a recent, though not altogether satisfactory review of the 
New Jersey compensation law, see the short article by Walter M. 
Adriance in The American Economic Review, vol. VII, pp. 712-713 
(September, 1917). 



CHAPTER VII 

THE ATTITUDE OF LABOR 

The proponents of social legislation in this country 
are becoming increasingly aware of the influence 
exerted on theories and measures, not by working- 
men, individually or collectively, but by "organized 
labor" so-called. Whereas it has become almost 
a political axiom that the labor vote elects no presi- 
dents, and may be counted on in the long run to fol- 
low party lines with the same faithfulness and ap- 
parently for the same reasons as the other sections 
of the population, leaders of the unions and feder- 
ations and brotherhoods into which the toilers have 
organized themselves speak with no uncertain voice 
in the nation's councils. Where the interests of 
labor are involved, however remotely, they are 
championed with varying degrees of success but 
with quite consistent aggressiveness. 

The social utility of this marked partizanship of 
labor organizations is questionable. Class hatreds 
are stimulated, and the efficient conduct of state 

239 



240 WORKMEN'S COMPENSATION AND INSURANCE 

business may be very seriously hampered, by such a 
policy as that adopted by the California State Fed- 
eration of Labor, which distributes a "Labor Rec- 
ord" of Senators and Assemblymen, tabulating 
their attitude on important labor measures on the 
basis of "Good Votes" and "Bad Votes." The in- 
herent iniquity of this species of lobbying is the more 
apparent in the case of the California report when 
we see that bills to abolish capital punishment, to 
lengthen the terms of judges, and to license detec- 
tive agencies, are considered important "labor 
measures" on which trade unions should stand and 
fall together. 1 

But whatever our opinions as to the methods 
which organized labor employs to enforce its de- 
mands, the power of the American Federation and 
its branches is undeniable, and makes the question 
of its exercise in the great field of workmen's com- 
pensation one of supreme importance. In ascer- 
taining the sentiments of trade unions on various 
aspects of compensation legislation, I have had re- 
course to two principal sources of information. 
One of these sources has been periodical literature, 

i See report on Labor Legislation and Labor Record of Senators 
and Assemblymen (Forty-first Session of California Legislature, 
Jan. 4 to Jan. 30, and Mar. 8 to May 9, 1915)— San Francisco: Cal. 
State Federation of Labor. 



THE ATTITUDE OF LABOR £41 

especially labor publications, and speeches and arti- 
cles by labor leaders; the other has been my cor- 
respondence with labor leaders throughout the coun- 
try, to whom I have written for expressions of opin- 
ion on sundry topics connected with the subject at 
hand. 

Criticism and comment by organized labor on 
workmen's compensation legislation have naturally 
been directed toward those features most closely af- 
fecting the practical interests of the workingman. 
The employments covered, the accidents covered, 
the rates of compensation, the "waiting period,'' 
provisions for medical attention, — these matters 
have interested labor more than complicated insur- 
ance problems and theoretical questions which are 
fundamental but not immediate. I am able to pre- 
sent here a symposium of views which appear to 
be representative. But first it will be well to con- 
sider labor's views on the basic principles. 

On the general proposition of the desirability of 
workmen's compensation in some form there is sub- 
stantial accord. As a prominent labor leader said 
in the hearing before the Employers' Liability and 
Workmen's Compensation Commission at Wash- 
ington in 1911, "practically all labor unions of work- 
ing people are wedded to the theory of workmen's 



242 WORKMEN'S COMPENSATION AND INSURANCE 

compensation." 2 But on many details of the legis- 
lation in our states no sort of unanimity has been 
attained. 

The plan, beloved of Socialists, of incorporating 
workmen's compensation into a larger social insur- 
ance scheme, has been a special center of attack, 
being looked on by many labor leaders as an evasion 
of the real issue of the laborer's inherent interest 
in the profits of his toil, as well as a dangerous sign 
of a governmental paternalism ready to crush out 
the individual freedom of the workingman. A 
contributor to the American Federationist writes: 

"Benevolent society does not go to bed-rock ques- 
tions — why the meager wages, starved lives and 
the restricted opportunities of those who toil with 
their hands. It offers palliatives, not remedies. 
This new form of charity provides for the division 
of society into classes based on wages received. 
Those who receive less than a specified sum, auto- 
matically come under government supervision on 
the theory that they are unable to care for them- 
selves and their dependents properly. Therefore, 
the state and their employers set aside money for 
their upkeep in times of emergency. The work- 

2 Senate Document No. 338, 62d Congress, 2d Session, at p. 551; 
Statement of W. S. Carter, President Brotherhood of Locomotive 
Firemen and Engineers. 



THE ATTITUDE OF LABOR 243 

ers themselves make but meager contributions. 
Thus the fundamental principle of social insurance 
is to make permanent distinctions between social 
groups and to emphasize that distinction by gov- 
ernmental regulation. What wage-earners want is 
not benevolently administered saving of pennies but 
opportunity to do the world's work like free men 
and women and to receive honest returns for their 
labor in the form of adequate wages. Get off the 
backs of the workers and there will be no need for 
'insurance/ for then wage-earners like employers 
will have enough to live on and to provide for emer- 
gencies without 'aid.' " 3 

It is submitted that in his enthusiasm for the gen- 
eral cause of advancement of the workingman, the 
writer just quoted has suffered a temporary hiatus 
of common sense. There is no reason in the world 
why social insurance should be incompatible with 
high wages. There is every reason in the world 
why, even with the highest wages likely to be at- 
tained short of the millennium, compulsory insur- 
ance should be imposed on employers or employees 
or both. Saving cannot take the place of insur- 
ance; both because saving cannot, and in many in- 

3 Grant Hamilton in American Federationist, vol. XXIV, pp. 124- 
125 (February, 1917). 



244 WORKMEN'S COMPENSATION AND INSURANCE 

stances should not, be forced upon the recipient of a 
mere living wage, and because the young man at 
the outset of his career, to take one example, must 
face the danger of disabling accident without accu- 
mulated earnings. There is a need for social in- 
surance not distinct from, but wholly incorporate 
with, the need for a fairer division of profits with 
the men whose toil, equally with the genius that 
directs it, makes production possible. Higher 
wages, by raising the standard of living from sub- 
normal to normal, will help to stamp out disease and 
the accidents traceable to poverty and its incidents 
— ignorance and insufficient equipment; compul- 
sory social insurance will take care of the diminished 
margin of misery, and rescue the stricken and those 
dependent on them from economic shipwreck. 

It is quite immaterial in this connection how much 
the workingmen themselves contribute to the insur- 
ance fund, or whether they contribute at all; a 
natural economic adjustment would take place in 
either instance, so that wages would be greater or 
less by the amount of the premiums, depending on 
whether or not the laborer was called on to pay 
them. Collecting from the employer is collecting 
at the source — a mere matter of convenience. 
Whether the state should contribute to social insur- 



THE ATTITUDE OF LABOR 245 

ance funds is a more puzzling question. If the 
theory of industrial hazard is sound, it would seem 
not; the funds should be self-supporting, and con- 
tributions thereto drawn solely from the industry 
directly affected, and not indirectly by taxation 
from the people as a whole. 

The innate conservatism of man, be he capitalist 
or mechanic, has served, however, to raise quite a 
formidable opposition to the extension of the com- 
pulsory social insurance principle. No less a 
leader than Mr. Samuel Gompers has declared 
emphatically: "Our movement stands for social 
insurance and government aid, but of a voluntary 
character and not compulsory." 4 It is usual to 
cite the success of social insurance schemes carried 
on by the trade unions themselves as an argument 
against entrusting their administration to the gov- 
ernment; and to prate of the danger to "funda- 
mental principles of human liberty" resulting from 
the adoption of the compulsory principle. 5 The 
real reason why certain powerful forces in the 
American Federation of Labor have continuously 
opposed centralized social insurance is not far to 

* Samuel Gompers in American Federationist, vol. XXIII, p. 676 
(August, 1916). 

s Ibid., pp. 348, 674 (May and August, 1916); see also Hamilton 
article (supra, footnote 3), pp. 124-125. 



£46 WORKMEN'S COMPENSATION AND INSURANCE 

seek; its adoption would tend to weaken the la- 
bor unions, depriving them of one of the means 
whereby they endeavor to make themselves indis- 
pensable to the workingman. Organized labor is 
jealous of its power; it regards itself as the instru- 
mentality dedicated to the task of wresting from 
capitalistic oppressors the share in the profits of 
production to which the toiler deems himself enti- 
tled. Consequently, organized labor does not rel- 
ish the idea of a workman turning to another agency 
— the government — for aid in his affliction ; the right 
of the laborer to fight his battles for economic rec- 
ognition through his own trade unions being thereby 
infringed. 

The author confesses to a complete lack of sym- 
pathy with this point of view. He believes that 
provision for the compensation of both sick and in- 
jured laborers is a matter of too great public con- 
cern to be left in the hands of irresponsible 
voluntary organizations. The purpose of social in- 
surance as applied to workmen's compensation is to 
abolish the indigent class created by industrial acci- 
dents. To accomplish this, governmental compul- 
sion is needed ; it will not do to leave the workman 
the option of insuring, for that would mean that in 
many instances the gambling spirit would assert it- 



THE ATTITUDE OF LABOR 247 

self, and insurance would be neglected on the chance 
that no accident would occur. Moreover, if the 
old liability system were retained, the workman 
would often be too poor to insure himself ade- 
quately, since the employer, being subject to expen- 
sive damage suits for injuries to his employees, 
would be compelled to hold in reserve to meet those 
emergencies a sum which ought to be expended in 
increasing wages, or insuring reasonable compensa- 
tion. Under an adequate workmen's compensation 
system, where awards are properly secured — and 
that can mean only some sort of state insurance — 
the employee has no need to insure himself against 
accidents, as payment in the case of injury is guar- 
anteed him. Hence, where workmen's compensa- 
tion is adopted, the question left is not one affecting 
the independence of the employee at all, but simply 
the relative efficiency of pure compensation and in- 
sured awards, the liability of the employer being 
fixed in either case. 

Bitter as is the present-day opposition from some 
quarters to applying social insurance principles even 
to the comparatively narrow field of workmen's 
compensation laws, it is encouraging to note that 
one form of unprogressive criticism is slowly dying 
out. In the earlier days of the movement, the pop- 



248 WORKMEN'S COMPENSATION AND INSURANCE 

ularity of "elective" acts which left it optional with 
both parties to labor contracts whether the provi- 
sions of the "experimental" new legislation should 
apply, was one of the striking manifestations of the 
eagerness of organized labor to retain its independ- 
ence from governmental "paternalism." As re- 
cently as 1914 the Convention of Railroad Conduc- 
tors "was not opposed to compensation if it could be 
made optional, and favors improving and strength- 
ening liability laws." 6 But this feeling has largely 
given way to an eager desire for, and a general ac- 
quiescence in, compulsory compensation — as distin- 
guished from compulsory social insurance — by the 
labor interests. The joint Commission of the 
American Federation of Labor and the National 
Civic Federation, reporting in 1914, summed up 
the situation as follows : 

"The Commission found that as employees be- 
came accustomed to the working of compensation 
acts and realized that they were real and substantial 
and that payments were made promptly, they lost 
interest in the question of employers' liability laws, 
they generally expressed themselves as satisfied with 
a good compensation act and did not care for the 

6 In Report of Proceedings of 24th Annual Convention, 1914, Amer- 
ican Federation of Labor. 



THE ATTITUDE OF LABOR 242 

option to sue under the liability law. While this 
was not always the case, it is rapidly becoming the 
dominating thought. In fact, the evolution of this 
legislation tends toward making the compensation 
act an exclusive remedy." 7 

To the attitude of labor towards the more specific 
questions raised by workmen's compensation — in- 
juries covered, employments covered, methods of 
administration, amount of compensation, etc. — rec- 
ommendations of the Executive Committee of the 
American Federation of Labor furnish the best key. 
Supplementing this and similar data by frequent 
reference to my letter-file, I am enabled to present 
the following outline of labor opinion on the sub- 
ject at hand as I have found it. 

Basis of Computing Compensation Bates. 
Early compensation laws, like that in force to-day 
in New Jersey, unquestionably erred on the side 
of parsimony in their schedules of awards. The 
basis of computation was commonly 50 per cent.; 
thus, if a workman were totally disabled for a period 
of four months, he would receive by way of com- 
pensation a sum equal to only one-half of his 
wages during that period, and even that was likely 
to be curtailed by some absurd provision, as that 

7 U. S. Senate Document 419, 63d Congress, 2d Session. 



250 WORKMEN'S COMPENSATION AND INSURANCE 

not more than $10 a week should be paid to any 
victim. The obvious inadequacy of such payments 
naturally attracted the attention of those directing 
the movements of organized labor ; and the legisla- 
tures were very shortly under fire from labor lobby- 
ists, who demanded a more liberal basis of compen- 
sation. The American Federation puts first on its 
list of injunctions to agitators for compensation re- 
forms : "Endeavor to bring the basis of compensa- 
tion rates to a minimum of 66/3% of the wages of 
the insured." 8 

It has been my experience that this proposal of 
the Federation meets with general approval among 
workingmen, though I have talked with some who 
argued that 75% was a more equitable proportion. 
A correspondent from the Massachusetts State 
Branch of the American Federation of Labor 
writes : 

"In Massachusetts the rate of compensation is 
two-thirds wages and appears at present to be satis- 
factory. The maximum of $10.00, however, is con- 
sidered too low and attempts have been made to 
increase it to $14.00." 9 

s Report of Proceedings of 25 th Annual Convention, 1915, Amer- 
ican Federation of Labor, at page 96. 

9 Letter from H. Sterling, Mass. Branch Amer. Fed. of Labor, 
Dec. 2, 1916. See also leaflet: "Labor Legislative Measure for 1917," 
published by the Massachusetts organization. 



THE ATTITUDE OF LABOR 251 

From Maryland comes the following forceful 
statement : 

"The schedule of award should increase; fifty per 
cent, is not enough. Personally my idea would be 
to eliminate the waiting period, increase the com- 
pensation to 66%% with a minimum of five dollars 
and a maximum of fifteen dollars. The compensa- 
tion to be awarded from the first day and to be paid 
without the necessity of going through a lot of red 
tape to get it." 10 

The Secretary-Treasurer of the Kentucky State 
Federation of Labor shares the same views : 

6i 66 2 /i% is, I believe, a fair schedule of benefits 
for injury with a maximum weekly payment of not 
more than $15.00, and in case of total disability, to 
continue during lifetime." " 

In the report of the Conference of the Pennsyl- 
vania Federation of Labor for 1916, appears this 
significant item: 

"Motion by Fowler that an endeavor be made to 
have the percentage of compensation raised to 
sixty-six and two-thirds per cent. Carried." 12 

10 Letter from Henry J. Hardy, Cor. and Rec. Sec'y., Maryland 
State and Dist. of Columbia Fed. of Labor, Aug. 17, 1916. 

11 Letter from P. J. Campbell, Sec'y.-Treas., Ky. State Fed. of 
Labor, Aug. 16, 1916. 

12 See Report Pa. Fed. of Labor Conference, Mar. 1916, at page 6. 



252 WORKMEN'S COMPENSATION AND INSURANCE 

"Efforts will be made at the next session of the 
legislature to amend the law so as to provide for 
an increase in the compensation to 66%% of the 
wage received at the time of injury," writes a Kan- 
sas Labor official. 13 

In New Jersey similar views are expressed. 14 
From Porto Rico comes a demand for a 75% 
basis 15 — but insistence on so high a percentage I 
have found very unusual. 15a A North Dakota cor- 
respondent even expresses himself as satisfied with 
60%. 16 

is Letter from Chas. Hamlin, Sec'y.-Treas., Kan. State Fed. of 
Labor, Aug. 26, 1916. 

i* Letter from H. T. Hilfers, Sec'y., Essex Trades Council (N. J.), 
Aug. 25, 1916. 

is Letter from Rafael Alonzo, Gen. Sec'y., Federaci6n Libre de los 
Trabaj adores de Puerto Rico, Sept. 23, 1916. The English of the 
writer is curious: "A man disabled or despoiled of his means to 
earn his life should receive highest percentage of the wages that he 
was able to earn in his normal state to work. A 75 % is a fair per- 
centage." 

isa The author, in the course of an interview with Frank Morrison, 
Secretary of the American Federation of Labor, on May 3, 1918, 
asked Mr. Morrison what wage percentage basis for compensation 
awards the Federation stood for. "We stand for all we can get," 
he replied; but, on being pressed, he admitted that 100% would 
probably be inadvisable, as encouraging malingering. Mr. Morri- 
son's attitude, if really portrayed by his hasty remark, is extreme and 
exceptional. 

is Letter from A. W. Bowman, Fargo Trades and Labor Assembly 
(No. Dak.), Sept. 21, 1916. Mr. Bowman's answer to my question 
as to rates: "I think 60% would be fair," may be coupled with his 
answer to another question as to how active labor organizations in 
North Dakota had been in compensation matters: "Two years ago 



THE ATTITUDE OF LABOR 253 

To conclude, labor appears content that compen- 
sation awards shall be computed on a basis of two- 
thirds of normal wages ; and in the present writer's 
opinion, that percentage, which has already been 
adopted in several states, is an eminently fair and 
practical one. Less would cause suffering; more 
would encourage malingering. 

The "Waiting Period." It was feared by the 
f ramers of the early compensation acts in this coun- 
try that an immediate payment of compensation 
from the date of injury would result in a multitude 
of trivial claims; and it was also felt that a certain 
period of time should be allowed to elapse between 
the accident and any disbursement, in order to de- 
termine the extent of the injury and the facts on 
which the employee's claim was predicated. Con- 
sequently the "waiting period" was devised, dur- 
ing which no compensation is payable, and varying 
under the American acts anywhere from three days 
to three weeks in length, though a two weeks' period 
has been adopted in most jurisdictions. 

Needless to say, this feature has been a target 
for attack by the labor unions. They have pointed 
out that there is no logical reason for an arbitrary 

we got the compensation through the Senate, but it was killed in 
the House," to indicate that his estimate was based on conjecture 
rather than experience. 



254 WORKMEN'S COMPENSATION AND INSURANCE 

deprivation of compensation during a part of the 
period of disability; and they have enlarged also 
upon the hardship caused to very poor families 
whose income is suddenly cut off at a time when it 
is particularly needed. There is much justice in 
these criticisms. 

It is worthy of note, however, that labor unions 
are not unanimous in their demands for the aboli- 
tion of the waiting period, though there is general 
agreement that it should be as short as is compatible 
with its purposes. Where medical attention is to 
be given at the employer's expense for a limited 
period, it seems to be the view of labor leaders that 
a change should be effected, making such atten- 
tion co-extensive with the suffering. 

I subjoin a representative collection of opinions 
on the waiting period, indicating in each case the 
state in which the particular labor leader is active: 

Oklahoma: "The waiting period should at least 
be shortened, if not abolished, and the medical 
period lengthened." 17 

Montana: "The waiting period is not satisfac- 
tory but I would not say without further expres- 
sions of opinions from those concerned in this move- 

17 Letter from Ollie S. Wilson, Sec'y.-Treas., Okla. State Fed. of 
Labor, October 18, 1916. 



THE ATTITUDE OF LABOR 255 

merit whether it should be abolished entirely or 
not." 18 

New York: "Chief defects of the law are long 
waiting periods and permitting old-line companies 
to participate in business." 19 

New Jersey: "I am in favor that (sic) the wait- 
ing period should be abolished, and the worker 
should get compensation providing that he is sick 
a week or more." 20 

Kansas: "A shorter waiting period." 21 

California: "The waiting period should be re- 
duced from two weeks to one week." 22 

Iowa: "I beg to advise you that the present ob- 
jections to the Iowa law is (sic) the time limit in 
which the injured employee is attended by the physi- 
cian. Also the waiting period of two weeks and 
the amount of the compensation." 23 

Pennsylvania: "Motion that the time to begin 
paying compensation be one day instead of fourteen 

18 Letter from O. M. Partelow, Sec'y-> Silver Bow Trades and Labor 
Council (Montana), Oct. 17, 1916. 

is Letter from E. A. Bates, Sec'y.-Treas., N. Y. State Fed. of 
Labor, Aug. 31, 1916. 

20 See footnote 14. 

2i See footnote 13. 

22 Letter from Paul Scharrenberg, Sec'y.-Treas., Cal. State Fed. of 
Labor, Aug. 25, 1916. 

23 Letter from J. A. Canfield, Sec'y.-Treas., Iowa State Fed. of 
Labor, Aug. 21, 1916. 



256 WORKMEN'S COMPENSATION AND INSURANCE 

days after accident. Amendment that the pay- 
ments begin from the time of the accident. Amend- 
ment carried. Motion as amended carried." 24 

Kentucky: "There should be no waiting period, 
payment should begin at once." 25 

Maryland: "Personally my idea would be to 
eliminate the waiting period." 26 

Massachusetts: "Our waiting period was re- 
duced last year from fourteen days to ten days, and 
seems to be satisfactory except that we desire that 
when disability continues twenty-eight days, com- 
pensation should begin from date of accident." 2T 

Arizona: "The injured man should be paid for 
the time that he loses from the time that he is off 
duty on account of his injury, instead of losing the 
first two weeks of his time." 28 

Minnesota: "Our recent convention also went 
on record for — reducing the waiting period to seven 
days." 29 

Employments Covered by Acts. As a question 

24 Seef ootnote 12 

25 See footnote 11. 

26 See footnote 10. 

27 See footnote 9. 

28 Letter from Thos. A. French, Sec'y-Treas., Arizona State Fed. 
of Labor, Aug. 15, 1916. 

29 Letter from George W. Lawson, Sec'y., Minn. State Fed. of 
Labor, Aug. 25, 1916. 



THE ATTITUDE OF LABOR 257 

of pure theory, the logical necessity of the inclusion 
of all employments under an equitable workmen's 
compensation law is not even debatable. The early 
acts were confined in their operation to "hazardous 
employments"; but all employments involve some 
hazard, and it is only fair that there should be pro- 
tection in proportion to the danger. At one time 
it was suspected that the inclusion of all employ- 
ments within the purview of workmen's compensa- 
tion acts would be opposed by organized labor on 
selfish grounds; but that that suspicion was un- 
founded, and that the labor unions are in substantial 
accord in their demand for laws of the broadest 
application, is clear from the following quotations: 

Arkansas: "It seems to me that casual em- 
ployees should not be excluded from the benefits 
of a compensation act." 30 

Maryland: "The law should be extended to 
cover all classes of employment and not merely the 
hazardous class to the wife and children of the de- 
pendent." 31 

California : "I do believe that the compensation 
should be made compulsory for all employments." 32 

so Letter from L. H. Moore, Sec'y.-Treas., Ark. State Fed, of 
Labor, Sept. 14, 1916. 
si See footnote 10. 
32 See footnote 22. 



258 WORKMEN'S COMPENSATION AND INSURANCE 

North Dakota: "I would favor all employ- 
ments under this law." 33 

Montana : "As to the chief defects of the exist- 
ing law, they are too numerous to mention. . . . 
It does not cover aliens. It is not compulsory upon 
all." 34 

One discordant note, however, comes from a labor 
leader in Oklahoma : "Would suggest . . . changes 
. . . for instance, excluding the employer with only 
two employees, the adding and making clear 
further industries. . . ." 35 It is submitted that 
excepting small employers from the operation of 
the acts in accordance with this suggestion would 
serve no useful purpose, and is contrary to the spirit 
of workmen's compensation as well as the current 
of intelligent labor opinion. 

The question of what employments should be cov- 
ered by the compensation acts has not been dis- 
cussed to any considerable extent in recent conven- 
tions of the American Federation of Labor. The 
liberal temper of that organization, however, so far 
as this subject is concerned, is indicated by the sup- 
port given to the movement (now happily success- 
ful) to assure the extension of compensation pro- 

33 See footnote 16. 35 See footnote 17. 

s* See footnote 18. 



THE ATTITUDE OF LABOR 259 

visions to workers engaged in loading vessels and 
services of a similar nature. 35a 

Occupational Diseases, Although certain occu- 
pational diseases have been included among the 
"accidents" for which compensation is due in Eng- 
land for many years, and their number is constantly 
being added to, 36 the compensation laws of the 
United States have been slow to recognize the in- 
disputable fact that the acquiring of certain diseases 
is as truly due to occupational hazard as the blow- 
ing off of a workman's arm by an explosion in a 
dynamite factory. Lead poisoning, for example, in 
the paint industry, is a danger to which the laborer 
is constantly exposed, and for which the industry 
should be made to pay. 37 

Recently the American Federation of Labor has 
turned its attention to the question of occupational 
disease. To the list of the recommendations of the 
Committee on Education on Workmen's Compen- 
sation, the following has been added, and strongly 

35a Amer. Fed. of Labor, Proceedings, 37th Annual Convention, 
1917, pp. 116, 311, 312. 

36 The English Act (6 Edw. VII, c. 58), s. 8, subd. 6, also Schedule 
3. The schedule enumerates compensable occupational diseases; the 
other provision permits additions to this list by the Secretary of 
State. 

37 Honnold, Workmen's Compensation, p. 542. See Adams v. Acme 
Works, 182 Mich. 157. 



260 WORKMEN'S COMPENSATION AND INSURANCE 

urged upon the labor unions engaged in securing 
legislative reforms: "Compensation to be paid for 
death or illness from occupational diseases." 38 At 
the Pennsylvania Federation of Labor Conference, 
March 22, 1916, a "motion to include occupational 
disease in the Compensation Act amendment' ' was 
carried. 39 

With the qualifications, therefore, already shown 
to be attached to labor's support of social insur- 
ance, the attitude of labor on the inclusion of occu- 
pational diseases among compensable injuries can 
be said to be distinctly favorable. 

Methods of Administration. A law which is not 
enforced is worse than no law at all, for it holds the 
whole administration of justice up to ridicule, and 
invites attacks upon the social system at other 
points. It is all-important, therefore, that the ad- 
ministration of so far-reaching a measure as a work- 
men's compensation act should be placed in the 
hands of officials trained for the work, conscientious 
and reliable in the highest degree, and properly re- 
sponsible for their actions. Is it better to leave 
the administration of the law to an insurance com- 
mission appointed by the Governor? to an elected 

38 Amer. Fed. of Labor, Proceedings, 25th Annual Convention, 1915, 
p. 96. 

39 Report of Proceedings, p. 7. 



THE ATTITUDE OF LABOR 261 

board? to a legislative commission? or to the courts? 
The question has been variously answered by the 
state legislatures. With the merits of the con- 
troversy we are not here concerned ; but the follow- 
ing expressions of opinion by labor leaders may 
prove of interest: 

Florida: "I think if a compensation law was 
left up to a commission to administer, that the com- 
mission should be composed of the most learned men 
possible, and that the commission should be com- 
posed of men from all walks of life, who are well- 
trained, or who have had much experience in deal- 
ing in justice. I think it would probably be best 
to have men educated for this particular work." 40 

California: "I think the California law is fairly 
efficiently administered." 41 (An Industrial Acci- 
dent Commission is in control under the California 
Act.) 

Kentucky: Administration "by special commis- 
sion" is favored by an official of the Federation of 
Labor of this State. 42 

Georgia: "This is another question that should 
be decided by conditions. In states with small pop- 

40 Letter from L. R. Campbell, Fla. State Fed. of Labor, Aug. 14 s . 
1916. 

4i See footnote 22. 
42 See footnote 11. 



262 WORKMEN'S COMPENSATION AND INSURANCE 

illations and having no large industrial centers I 
think the courts could handle the matter in a very- 
satisfactory manner. In other states, I am of the 
opinion the courts are so crowded with work now 
it would be impossible for them to undertake it and 
a special commission would prove more satisfac- 
tory." 43 

New York: "We consider the act has been 
fairly and efficiently administered." 44 (The New 
York compensation law is under the superintend- 
ence of an Industrial Commission.) 

Iowa: "The law in this state has worked out 
fairly well, considering the short time it has been 
in operation." 45 ( Supervision by the Industrial 
Commission is the order of things in Iowa.) 

Oklahoma: "The method of administering is all 
right, to my mind, but the law of course restricts the 
industrial commission and from that they are unable 
to depart, hence the necessity for amendment." 46 

Arizona: "The principal objection to the pres- 
ent law is the fact that there seems to be no way to 
force the employer to pay without going into court, 

43 This very sensible and thoughtful answer is from Robt. Fechner, 
Secretary of the Ga. State Fed. of Labor, under date of Aug. 30, 
1916. 

44 See footnote 19. 

45 See footnote 23. 

46 See footnote 17. 



THE ATTITUDE OF LABOR 263 

and the injured worker, in most cases, has no money 
to go into court." 47 

North Dakota: "I would favor commission." 48 

The American Federation of Labor itself has set 
the seal of its official approval on commission ad- 
ministration, having adopted this resolution at its 
convention in 1915: 

"Administration of compensation laws m future 
to be under the supervision of state commissions 
appointed for that duty alone." 49 

The relegating of compensation business to the 
courts is thus becoming more and more unpopular. 
It can be stated with confidence that organized 
labor is in full sympathy with the recognized tend- 
ency to place the administration of these laws in 
the hands of appointed commissions, with broad 
discretionary powers. 

Labor sentiment is shifting and uncertain, but" 
may fairly be counted on to follow the present ad- 
vantage of the workingman, as he himself sees it. 
Thus his interest in and his ardor for compensation 
reforms vary with the immediateness of the prob- 
lems they are intended to solve. In this chapter 

47 See footnote 28. 49 See footnote 38. 

4s See footnote 16. 



264 WORKMEN'S COMPENSATION AND INSURANCE 

the author has simply sought to picture the attitude 
of labor at the present day, as to a few of the well- 
recognized issues which confront all students of the 
subject. It may well be that a few months from 
now the attention of trade-union leaders will be 
quite otherwise focussed, and their views on the 
very groundwork of the compensation principle 
have undergone radical changes. 



CHAPTER VIII 

THE SOLDIERS' AND SAILORS' INSURANCE ACT 

With the entrance of the United States into the 
Great War, the American nation suddenly found 
itself face to face with a prospect of probable deaths 
and disabling injuries among its citizens within a 
brief period, upon a scale hitherto undreamed-of. 
The closest parallel is the Civil War ; but the serious 
nature of that conflict was not suspected at the out- 
set, whereas in the Armageddon of to-day the 
strength and resources of the enemy are known to be 
enormous, and his determination great. Fully 
aware of the facts, therefore, the Administration, 
shortly after the declaration of war in April, 1917, 
set itself with commendable energy to the task of de- 
vising means to prevent at least some of the antici- 
pated disastrous social consequences of the cata- 
clysm; and the Soldiers' and Sailors' Insurance 
Act of October 6, 1917, is the result. 1 

The social problem presented by war risks is the 
same as that growing out of industrial hazards ; but 

i Public, No. 90, 65th Congress (approved Oct. 6, 1917). 

265 



266 WORKMEN'S COMPENSATION AND INSURAxVCE 

the appeal to a nation's sense of justice is more dra- 
matic in the former case. This accounts, in large 
part, for the universal acquiescence in the policy of 
compensating and insuring our fighting men ; an ac- 
quiescence unique in the history of compensation 
legislation. Even the private insurance companies 
have for the most part left off grumbling at the in- 
terference of the government in the insurance busi- 
ness, and have cooperated heartily in the adminis- 
tration of the new law. 2 

No nation of modern times has ever taken lightly 
the duty it owes to the soldiers who fought to pre- 
serve it, and to their widows and other dependents. 
The common method of discharging this obligation, 
however, has been by a system little differentiated 
from poor-relief — the system of pensions. Crip- 
pled or aged warriors, the families of men killed in 
battle, and sometimes even able-bodied young men 
who emerge from the service quite as competent to 
earn their living as before, have been the recipients 
of a somewhat hectic bounty. On the other hand, 
deserving claimants have often been overlooked. 
The pension system reached its climax of absurdity 
and inequity in the United States in the period fol- 

2 See Weekly Underwriter, vol. XCVITI, no. 9, p. 34 (Jan. 12, 
1918). The article, however, criticises some features of the act. 



THE SOLDIERS' AND SAILORS' INSURANCE ACT 267 

lowing the Civil War, when pensions became the 
tool of political aspirants, were used to buy votes, to 
curry favor with patriotic constituents, and to sup- 
port distant relatives of long-dead veterans whose 
claims upon the public gratitude were of the 
slightest. 

The pension scandals were the inevitable result 
of a disorganized and haphazard method of admin- 
istering aid to those deemed to have deserved well of 
their country. No one, we suppose, will dissent 
from the proposition that where a man has incurred 
disability while fighting to protect his fellow-citi- 
zens, those fellow-citizens should see to it that his 
enforced non-productiveness does not result in any 
more misery to him than can possibly be avoided. 
Common justice and national egoism alike dictate a 
liberal policy of compensating the crippled hero, 
and of showing such signal gratitude for his services 
as to encourage others to serve as faithfully. It 
does not follow, however, that money bestowed in- 
discriminately in sporadic bursts of enthusiasm 
effectively accomplishes these desired ends. As in 
the administration of all compensation schemes, two 
things are essential to success: first, that the 
amounts paid be proportionate to the disability, and 
to the number of dependents deprived of support^ 



268 WORKMEN'S COMPENSATION AND INSURANCE 

and, secondly, that the element of charity or gratu- 
ity be dissociated from the whole scheme, so that a 
self-respecting man can accept the money as his just 
due, as the liquidation of society's obligation to him. 

These fundamental principles have been fully 
recognized in the compensation provisions of the 
Act of October 6, 1917, and in the sections covering 
allotments and allowances to dependents. Fur- 
thermore, the Act introduces a scheme for voluntary 
insurance which should have a great effect in reduc- 
ing the poverty caused by the death or disability of 
men who are actually or potentially the supporters 
of families ; and vocational training and rehabilita- 
tion of crippled soldiers are not overlooked. These 
and other features will be briefly outlined here. 

The Soldiers' and Sailors' Insurance Act (as we 
have termed it) is in the form of an amendment to 
the statute of September 2, 1914, creating the War 
Risk Insurance Bureau. It establishes a Division 
of Military and Naval Insurance in that Bureau, 
and charges it with the administration of all the pro- 
visions with which we are here concerned. The 
whole is organized under the Treasury Depart- 
ment; and the scheme itself is said to have been the 
outcome of cooperation between the Treasury, the 
Committee on Labor of the Advisory Commission 



THE SOLDIERS' AND SAILORS' INSURANCE ACT 269 

of the Council of National Defense, the Depart- 
ments of Commerce, Navy and Labor, an advisory 
committee of insurance representatives, and others. 3 
Insofar as the voluntary insurance provisions are 
concerned, the moving cause may be said to have 
been the prohibitive rates charged by the insurance 
companies to men entering the active military or 
naval branches. 4 

The first important subdivision of the compre- 
hensive scheme of the Act is the plan of family allot- 
ments and allowances. The United States does not 
intend that men in the military or naval service shall 
leave their wives and children to shift for them- 
selves ; nor does it propose that the amount of money 
received by the dependents of an enlisted man shall 
be limited by what he can spare from his soldier's 
pay, in cases where such provision would be grossly 
inadequate. Accordingly, it is provided : first, that 
a soldier or sailor with a wife or children must make 
an allotment to them of a fixed proportion of his 
pay; and secondly, that the Government will add to 
this an allowance graded according to the number 
of dependents. Furthermore, where the enlisted 
man voluntarily allots part of his stipend to a pa- 

3 American Economic Review, vol. VII, p. 196 (March, 1918). 
* Ibid. 



270 WORKMEN'S COMPENSATION AND INSURANCE 

rent, grandparent, brother or sister, the Govern- 
ment will, under certain restrictions, supplement 
such payment by a generous family allowance. 

Compulsory allotments to wife or children are in 
no case to be less than fifteen dollars, nor more 
than half pay; but with these restrictions they are 
always to be in an amount equal to the family 
allowances provided for. The latter, in "Class A" 
or the compulsory class, are as follows: if there be 
a wife but no child, $15; if there be a wife and 
one child, $25 ; if there be a wife and two children, 
$82.50, with $5 per month for each additional child; 
if there be no wife, but one child, $5 ; if there be no 
wife, but two children, $12.50; if there be no wife, 
but three children, $20 ; if there be no wife, but four 
children, $30, with $5 per month for each additional 
child. Family allowances are in no case to exceed 
$50 per month; and are to be paid by the United 
States upon written application to the Bureau by 
the enlisted man or by or on behalf of a prospec- 
tive beneficiary. 5 

The status of a divorced wife is interesting in 
this connection. If she has not remarried, and ali- 
mony has been decreed her, she has all the rights 
of a lawful spouse so far as allotments and allow- 

s Sections 201, 204 and 205 of the Act. 



THE SOLDIERS' AND SAILORS' INSURANCE ACT 271 

ances are concerned, except that payments must 
not exceed the amount decreed her as alimony or 
support, and if her former husband has a second 
wife or children she is only entitled to the differ- 
ence between allotments or allowances made to 
them and half-pay or $50, respectively. The rule 
as to illegitimate children contains a similar limita- 
tion: allotments and allowances are not to exceed 
the amount the father is bound to pay under the 
judicial decree. 6 

To the rule that, in "Class A" cases, the enlisted 
man is compelled to allot the stated proportion of 
his stipend, there are certain exceptions. Where 
a wife or former wife divorced consents to a waiver 
of payments, and there is evidence satisfactory to 
the Bureau of her ability to support herself and the 
children in her custody, the allotment may be dis- 
pensed with. In the absence of consent by the wife, 
moreover, exemption may be granted for good 
cause shown, upon conditions prescribed by such 
regulations as may be made. 7 Here, as in many 
places throughout the Act, broad discretionary 
powers will be seen to be lodged in the Bureau. 8 

e Sees. 201 and 205 of the Act. 

7 Sec. 201 of the Act. 

8 This feature is commented on by W. F. Gephart in Amer. Eco- 
nomic Review, vol. VII, p. 197 (March, 1918). 



272 WORKMEN'S COMPENSATION AND INSURANCE 

Voluntary allotments the enlisted man is privi- 
leged to make to any beneficiary out of any por- 
tion of his pay remaining after the compulsory 
allotment is deducted, but this power is subject to 
such conditions and limitations as may be imposed 
by the Secretaries of War and of the Navy, re- 
spectively. 9 Where such allotments are actually 
made by the enlisted man to persons wholly or 
partly dependent on him, and conform in amount 
to certain stated regulations, the United States will 
add to them family allowances according to the 
following schedule: for one parent, $10; for two 
parents, $20; for each grandchild, brother, sister, 
and additional parent, $5. This schedule is the 
same when the person paying the allotment is a 
woman in the military or naval service, as, for in- 
stance, a member of the Army or Navy Nurse 
Corps; and in such case there is also a schedule of 
family allowances for children: for one child, $5; 
for two children, $12.50; $20 for three; and $30 for 
four, with $5 per month additional for each addi- 
tional child. All this group of schedules consti- 
tutes "Class B" of the family allowances. 10 

As has been stated, allowances in Class B are 
conditional upon the enlisted man's making volun- 

s Sec. 202 of the Act. 10 Sees. 204 and 206 of the Act. 



THE SOLDIERS' AND SAILORS' INSURANCE ACT 273 

tary allotments according to certain regulations 
(though for good cause shown, and under such 
rules as may be prescribed, exemption from these 
allotments as a condition precedent to payment of 
allowances may be granted). 11 The regulations 
are: that the maximum monthly allotment so re- 
quired shall be half-pay; that the minimum, where 
no allotments are made to members of Class A, 
shall be $15 per month; that the minimum, where 
an allotment to a member of Class A is being made, 
shall be one-seventh of pay, but not less than $5 
per month. The total monthly allowance paid to 
members of Class B, added to the enlisted man's 
allotment, is not to exceed the amount habitually 
contributed by him to their monthly support dur- 
ing the period of dependency but not more than a 
year immediately preceding his enlistment or the 
enactment of the Act. Where an allowance is paid 
to members of Class A, those in Class B can not 
receive more than the difference between that sum 
and $50. As between the two classes, allotments 
and family allowances are to be apportioned as pre- 
scribed by regulations. 12 

A rather radical, but probably wise provision, is 

n Sec. 206 of the Act. 

12 Sees. 206, 207 and 208 of the Act 



274, WORKMEN'S COMPENSATION AND INSURANCE 

made for those cases where allotments up to one- 
half of the enlisted man's pay have not been made. 
The Secretaries of War and of the Navy, respec- 
tively, are empowered to require, under such regu- 
lations as they may make, that any proportion of 
such one-half pay as is not allotted shall be depos- 
ited to the credit of the enlisted man, at 4 per cent 
interest, compounded semi-annually, and be held 
during such period of his service as may be pre- 
scribed. When payable the money is to be turned 
over to him if living, and in case of his death to 
such beneficiaries as he may have designated, or 
otherwise according to the laws of intestacy. 13 The 
purpose of this section is obviously to encourage 
thrift among the soldiers and sailors. It is an 
heroic method to apply, as it seems to be depriving 
the enlisted man of the free use of the money he 
has rightly earned, but it would doubtless be justi- 
fied by its social results. Like the provisions for 
compensation and insurance which we shall pres- 
ently discuss, this scheme is calculated to reduce 
that poverty and distress among soldiers and their 
families which has been in the past one of the most 
terrible consequences of war. 14 

is Sec. 203 of the Act. 

i*See article on "The Government and the Soldier's Family," by 



THE SOLDIERS' AND SAILORS' INSURANCE ACT 275 

Compensation for death or disability is provided 
by Article III of the Act. From the point of view 
of our study, this is the most important of the vari- 
ous subdivisions of the general plan, and the anal- 
ogy to workmen's compensation is very close. The 
public in this case is the ultimate consumer who 
profits by the soldier's activities in his dangerous 
occupation; and so the public pays, in the form of 
taxes, the money necessary to assure compensation 
to the disabled and to the dependents of the slain, 
just as, under the normal workmen's compensation 
act, the ultimate financial responsibility is shoul- 
dered by the consumer in the form of increased cost 
of the article he buys. 

Death and disability "resulting from personal 
injury suffered or disease contracted in the line of 
duty" are made the subject of compensation to be 
paid by the United States; but where the victim's 
affliction was caused by his own willful misconduct, 
compensation is denied. The schedule of monthly 
payments, where death results from the injury, is 
as follows : for a widow, $25 ; for a widow and one 
child, $35; for a widow and two children, $47.50, 

Samuel McCune Lindsay, in Review of Reviews for April, 1918, for 
an excellent discussion of the system of allotments and allowances 
under the Act. See also article by Paul H. Douglas in 24 Journ. 
of Pol. Econ., pp. 461-483 (May, 1918). 



276 WORKMEN'S COMPENSATION AND INSURANCE 

with $5 for each additional child up to two; for 
one child alone, $20 ; for two children, $30 ; for three 
children, $40, with $5 for each additional child up 
to two ; for a widowed mother, $20, with the limita- 
tions that such payment, when added to the total 
amount payable to widow and children, shall not 
exceed $75, and that such payment can be made 
for the death of one child only and not made at 
all if such widowed mother is already in receipt of 
compensation for the death of her husband. 15 

Payment of compensation to a widow or widowed 
mother under the schedule just described is until 
death or remarriage; payment to children is to 
cease on attainment of the age of eighteen years or 
marriage, unless the child is permanently helpless 
owing to idiocy, insanity or other cause. As be- 
tween a widow and children not in her custody, and 
as between children, the amount of the compensa- 
tion is to be apportioned as prescribed by regula- 
tions; "widow" as used in this section being defined 
not to include one who shall have married the de- 
ceased later than ten years after the time of injury. 
Where any compensation payable under this sec- 
tion is terminated by the happening of the contin- 
gency upon which it is limited, the amount to be 

is Sees. 300, 301 of the Act. 



THE SOLDIERS' AND SAILORS' INSURANCE ACT 277 

paid to remaining beneficiaries, if any, is to be the 
same as would have been payable had they been the 
sole original beneficiaries. Where the deceased's 
death occurs after discharge or resignation from 
service, the United States is to pay not in excess 
of $100 for burial expenses and cost of transporta- 
tion of the body to his home. Finally, it should 
be noted that not only "enlisted men" but commis- 
sioned officers and female members of the Army 
and Navy Nurse Corps on active service, are en- 
titled to the benefits of this and the other sections of 
the Act dealing with compensation for death and 
disability. 16 

The schedule of payments, in cases where total 
disability results from the injury, is as follows: if 
the injured man has neither wife nor child living, 
$30 per month; if he has a wife but no child, $45; 
a wife and one child, $55 ; a wife and two children, 
$65; a wife and three or more children, $75; no 
wife but one child, $40, with $10 a month for each 
additional child up to two; if a widowed mother 
dependent on him for support, $10 in addition to 
the above amounts. Where the injured man is so 
helpless as to be in constant need of a nurse or at- 
tendant, such additional sum up to $20 a month 

io Ibid. 



278 WORKMEN'S COMPENSATION AND INSURANCE 

shall be paid as the director shall deem reasonable; 
but if there has been a loss of both feet or both 
hands or both eyes, or the injured man has become 
totally blind or helplessly and permanently bed- 
ridden from causes occurring in the line of duty of 
the service of the United States, compensation is to 
be at the rate of $100 per month, without allow- 
ance for nurse or attendant. 17 

Cases of partial disability are compensated by a 
percentage of the amount that would be payable for 
total disability, equal to the degree of the reduction 
in earning capacity resulting from the injury; but 
no compensation is to be paid for a reduction in 
earning power rated at less than ten per cent. In 
this connection, the Bureau is charged with the duty 
of making out a schedule of ratings of reductions in 
earning capacity from specific injuries or combina- 
tions of injuries of a permanent nature. Such rat- 
ings may be as high as 100 per cent; and are to be 
based as far as possible upon the average impair- 
ments of earning capacity resulting from similar in- 
juries in civil occupations and not upon the impair- 
ment of earning capacity in each individual case, so 
that, in the words of the Act, "there shall be no re- 
duction in the rate of compensation for individual 

17 Sec. 302 (1) of the Act. 



THE SOLDIERS' AND SAILORS' INSURANCE ACT 279 

success in overcoming the handicap of a permanent 
injury." 18 This latter provision, apparently in- 
serted as a safeguard against malingering, also 
serves to emphasize the fact that compensation un- 
der this statute is to be claimed as a matter of right, 
and not as ill-disguised charity. 

In addition to the compensation which we have 
described, reasonable medical, surgical and hospital 
services are to be furnished by the United States 
to the injured person; and such artificial limbs, 
trusses, and similar appliances as the director may 
deem useful and reasonably necessary, will be pro- 
vided in proper cases. It is required, however, that 
every applicant for compensation shall submit him- 
self to physical examination whenever requested to 
do so by the authorities ; and failure to present him- 
self for or any attempt to obstruct such examination 
will be penalized by the suspension of awards. Ap- 
plicants must also submit to any reasonable medical 
or surgical treatment furnished by the Bureau at 
the Bureau's request ; and the consequences of un- 
reasonable failure so to do are not to be deemed 
to result from the injury for which compensation 
is awarded. 19 

The class of cases in which it is expressly provided 

is Sec. 302 (2) of the Act. i9 Sees. 302, 303 of the Act. 



280 WORKMEN'S COMPENSATION AND INSURANCE 

that no compensation shall be payable, is large and 
is covered by several sections of the Act. Thus, 
for death inflicted (otherwise than by the enemy) 
as a lawful punishment for a crime or military of- 
fense, no award is made. 20 A dismissal or dishon- 
orable or bad conduct discharge bars recovery of 
compensation. 21 Where death in the service is not 
officially recorded in the department under which 
the deceased was serving, no award will be made; 
and this operates to bar payments for a period dur- 
ing which the man was reported "missing" and a 
family allowance was paid for him. 22 Where death 
or disability does not occur prior to or within one 
year after discharge or resignation from the service, 
no compensation is payable; except that, where a 
medical examination, made pursuant to regulations 
at the time of discharge or resignation or within a 
reasonable time not in excess of one year thereafter, 
results in the issuance of a certificate by the director 
to the effect that the injured person on discharge 
or resignation was suffering from injury likely to 
result in death or disability, compensation for death 
or disability actually so resulting will be paid. 23 
A sort of statute of limitations is created by the 

20 Sec. 308 of the Act. 22 Sec. 307 of the Act. 

21 Ibid. 23 Sec. 306 of the Act. 



THE SOLDIERS' AND SAILORS' INSURANCE ACT 281 

section of the Act providing that no awards will be 
made unless claim therefor is filed within five years 
from resignation or discharge from or death in 
the service, with the exception that, in the case of 
compensable death or disability occurring subse- 
quent to resignation or discharge, the five years is 
to run from the commencement of such disability 
or the occurrence of such death. The director, 
however, may extend these periods for not more 
than one year, in his discretion; and where the 
claimant is a minor or of unsound mind or phys- 
ically unable to make a claim, the five-year period 
dates from the termination of such disability. 24 
Compensation is never to be paid for a term greater 
than two years prior to the claim, nor will increases 
be awarded to revert back more than one year prior 
thereto. 25 The power of the Bureau at any time 
to review awards, and to terminate, diminish, or 
increase them, or grant compensation where it has 
been refused or discontinued, is practically unlim- 
ited. 26 

Certain other of the provisions of this part of the 
Act must be briefly stated. Compensation is not 
assignable, and is exempt from attachment, execu- 

24 Sec. 309 of the Act 26 Sec. 305 of the Act. 

25 Sec. 310 of the Act. 



282 WORKMEN'S COMPENSATION AND INSURANCE 

tion and all taxation. 27 Awards will not be made 
while a person is in receipt of service or retirement 
pay, and existing laws providing for pensions, gra^ 
tuities, or payments in the event of death, are to 
have no prospective operation. 28 Compensation 
under this Act for disability or death of women in 
the Army or Navy Nurse Corps is to be in lieu of 
payments under the Federal Workmen's Compen- 
sation Law. 29 Where injury or death of one en- 
titled to be a beneficiary under this Act is so caused 
as to create a liability in some party other than 
the United States or the enemy to answer in dam- 
ages therefor, the beneficiary must assign his claim 
to the United States, to be prosecuted or compro- 
mised by the director and the money placed to the 
credit of the compensation fund. 30 A pension for 
widows of veterans of former wars is provided. 303 

One feature on which we have not yet touched, 
despite its close relationship to the compensation 
provisions, is the section providing for vocational 
training and rehabilitation. Of all the many wise 
and fore-thoughted ideas embodied in the Soldiers' 
and Sailors' Insurance Act, this is perhaps the most 
remarkable. It states, in substance, that in cases 

27 Sec. 311 of the Act. so Sec. 313 of the Act. 

28 Sec. 319 of the Act. soa Sec. 314 of the Act. 

29 Ibid. 



THE SOLDIERS' AND SAILORS' INSURANCE ACT 283 

of dismemberment, loss of sight or hearing, or other 
injury causing permanent disability, the injured 
person is to follow such course of " rehabilitation, 
reeducation, and vocational training as the United 
States may provide or procure to be provided." 
Where taking such a course prevents the injured 
man from earning his living meanwhile, he may be 
brought back into the military or naval service un- 
der a form of enlistment which entitles him to full 
pay as of the last month of his active service, and 
his family to corresponding allotments and allow- 
ances, in lieu of all other compensation. Where 
there is willful failure to follow the course pre- 
scribed or to enlist, compensation payments are to 
be suspended until such willful failure ceases, and 
no awards will be made for the intervening period. 31 
At the present writing, Congress is being be- 
sieged with proposed amendments to this section, 
designed to place the administration of its pro- 
visions under the Federal Board for Vocational Ed- 
ucation or other body, or to insert some new require- 
ment, limitation or benefit. 32 By the time this book 

si Sec. 304 of the Act. 

32 As this goes to press, news comes of the passage of an act 
to place vocational rehahilitation under the Federal Board for Vo- 
cational Education. Public, No. 178, 65th Congress (approved June 
27, 1918). See comment in The Vocational Summary, vol. 1, No. 2 
(June, 1918). 



284 WORKMEN'S COMPENSATION AND INSURANCE 

emerges from the press substantial changes will un- 
doubtedly have been wrought in the administrative 
features of the scheme ; but it may be asserted with 
confidence that no less intelligent and humane plan 
will be substituted, if the public is given a fair 
chance to judge of the far-sightedness as well as 
beneficence of this bit of modern social legislation. 
; The world is already so familiar with the exten- 
sive work being done in England in training the 
blind and other war cripples that the mere introduc- 
tion into this country of like salutary measures to 
deal with the problem of the disabled is no cause 
for surprise. We have, however, reason for self- 
congratulation in the promptness with which the 
unfortunate contingency was foreseen, and, above 
all, with the centralized control of relief and edu- 
cative measures which the Soldiers' and Sailors' 
Insurance Act has introduced. If the problem of 
rehabilitation were left to irresponsible private 
agencies, no matter how philanthropic and well- 
meaning, inequality and inefficiency would have 
been sure to follow. Moreover, the problem of the 
disabled of a war is a national problem, if there ever 
was one ; and it is to the public interest that full con- 
trol over the administration of the measures under- 
taken for its solution should be lodged in the central 



THE SOLDIERS' AND SAILORS' INSURANCE ACT 285 

government. As a people, we must work out our 
salvation together, shouldering alike the financial 
burdens and the responsibility for success. 

Some of the reasons for the need of vocational 
reeducation for disabled soldiers and sailors are 
outlined in a recent periodical. Such training is 
said to be required to insure the economic inde- 
pendence of these men; to conserve trade skill; to 
insure national rehabilitation; to avoid vocational 
regeneration, or lapse into a state of chronic de- 
pendence and lack of ambition ; to prevent exploita- 
tion of these unfortunates by the unscrupulous; to 
adjust the supply of labor to the demand; to develop 
new vocational efficiency. 33 All these purposes are 
best promoted by a highly centralized administra- 
tion, which can determine the precise needs of indus- 
try for skilled labor, and then undertake to fill those 
needs by training the proper number of men to do 
the sort of work required. Centralization we will 
have under the wise provision of our Act, which 
leaves the problem, as it should be left, in the hands 
of the Federal Government. 

We have already described the provisions for 
allotments and allowances, compensation, and vo- 
cational education, contained in the Act with which 

33 The Vocational Summary, vol. I, no. 1, p. 5 (May, 1918). 



286 WORKMEN'S COMPENSATION AND INSURANCE 

this chapter deals. There remains the feature 
which has attracted the most widespread attention 
— a scheme for voluntary insurance of men and 
women in the active military and naval service at 
ordinary peace time rates, in an institution operated 
and financed by the Government. It is the most gi- 
gantic experiment in state insurance yet attempted, 
and one of the boldest; for the United States prac- 
tically carries the entire additional war risk by way 
of gift to those who are fighting its battles. 

Like all social legislation, the insurance scheme 
of our Act has two aspects: the philanthropic and 
the practical. It has been the custom of writers, 
rather unfortunately I believe, to harp upon the 
insolvency of War Risk Insurance, and to advance 
the doctrine that it is only right and proper for a 
nation in time of war to scorn the dictates of busi- 
ness judgment and heap benefits upon those who 
fight to preserve it, regardless of cost. 84 Whether 
or not it is ever desirable for governments to be so 
purely sentimental, it seems clear that the United 
States was actuated by more practical motives when 
it instituted the scheme of insurance for its war- 

34 See American Economic Review, vol. VII, p. 202 (March, 1918). 
Here Mr. Gephart seems to be invoking patriotism and philanthropy 
to excuse business defects. 



THE SOLDIERS' AND SAILORS' INSURANCE ACT 287 

riors now under discussion. That scheme in opera- 
tion is a measure of justice to the dependents of 
those who die in the service; but justice, like hon- 
esty, is often also the best policy, and the United 
States does not stand to lose by the generous oppor- 
tunities it offers to its soldiers and sailors to insure 
themselves at low rates. It is true that the pre- 
miums collected will in all probability be wholly in- 
sufficient to defray the sums that must be paid out 
in claims and for overhead; but it should not be 
forgotten that the voluntary insurance offered by 
the United States is intended in large degree to be 
in lieu of pensions. If the completely disabled sol- 
dier, and the widow and dependents of him who died 
in service, can be removed from the pension lists by 
reason of the provision made in their behalf through 
insurance, an enormous financial burden will be 
lifted from the Government, enough to compensate 
at least in part for the losses it will incur in conduct- 
ing War Risk Insurance as a business. The in- 
sured at least pays premiums; the pensioner does 
not. In the long run the Government should be 
the gainer. If a grateful posterity, not satisfied 
with a system which will have made the families of 
veterans of the Great War secure from want, insists 
on pensioning them lavishly nevertheless, War Risk 



288 WORKMEN'S COMPENSATION AND INSURANCE 

Insurance will have failed in its purpose of prevent- 
ing a repetition of the scandalous expenditure and 
irrational distribution of favors which have made the 
name of "pension" odious in our time ; but this, like 
other economic problems projected into the future, 
must be left for its solution to the wisdom and sense 
of justice of the coming generation. We will have 
laid at least a sound foundation, according to our 
lights. 

The insurance provisions of our Act are con- 
tained in Sections 400 to 404, inclusive. It is first 
provided that in order to give to all commissioned 
officers and enlisted men and to female members 
of the Army and Navy Nurse Corps employed in 
active service "greater protection for themselves 
and their dependents than is provided in Article 
III" (the compensation article) , the United States, 
"upon application to the bureau and without med- 
ical examination" will grant insurance against death 
or total permanent disability in any multiple of 
$500, but not less than $1,000 or more than $10,000, 
upon payment of the prescribed premiums. 35 In- 
surance must be applied for within 120 days after 
enlistment or entrance into and employment in the 
active service and before discharge or resignation; 

*s Sec. 400 of the Act. 



THE SOLDIERS' AND SAILORS' INSURANCE ACT 289 

except that "those persons who are in the active 
war service at the time of the publication of the 
terms and conditions of such contract of insurance," 
and remain so, may apply at any time within 120 
days thereafter. 36 Automatic coverage of a sort is 
provided for those persons in the service on or after 
April 6, 1917, who become or have become totally 
and permanently disabled or die within 120 days 
after publication as stated above, without having 
made the proper application. Such a person is 
deemed to have applied for and been granted insur- 
ance, and payments of $25 per month are to be 
made to him during life, or in case of death before 
receiving any or as many as two hundred and forty 
of such installments, to his wife from the time of his 
death and during her widowhood, or to his child, or 
widowed mother while they survive him. In no 
case, however, are more than two hundred and forty 
monthly installments to be paid. 37 

The peculiar features of the war risk insurance 
policy are set forth with some particularity in Sec- 
tion 402 of the Act. The director, subject to the 
general supervision of the Secretary of the Treas- 
ury, is allowed wide latitude in settling the exact 
terms and conditions of the contract. .The insur- 

36 Sec. 401 of the Act. st Ibid. 



990 WORKMEN'S COMPENSATION AND INSURANCE 

ance is not assignable, nor subject to the claims of 
the creditors either of the insured or the beneficiary. 
It is payable only to a spouse, child, grandchild, 
brother or sister, or to the insured during total and 
permanent disability. Ordinarily it will be paid iri 
two hundred and forty monthly installments; but 
provisions for maturity at certain ages, continuous 
installments during the life of the insured or the 
beneficiaries, for cash, loan, paid up and extended 
values, and other provisions proving reasonable and 
practicable, may be provided for in the contract, or 
from time to time by regulations. Where there is 
no surviving duly designated beneficiary within the 
permitted class, the money is to be distributed 
among such members of that class as would be en- 
titled to the deceased's personal property under the 
laws of intestacy ; and if no such person survive the 
insured, the latter's estate is to be credited with the 
amount of the reserve value of the insurance at the 
time of his death, calculated in the manner already 
provided for. 

As we have already stated in these pages, the 
excess mortality and disability cost resulting from 
the hazards of war is to be borne by the United 
States ; and the same is true of the expenses of ad- 
ministration. This result is assured by the iron- 



THE SOLDIERS' AND SAILORS' INSURANCE ACT 291 

bound provision that the premium rates charged 
are to be the net rates based upon the American 
Experience Table of Mortality and interest at three 
and one-half per cent. 38 

One of the most bitterly criticized provisions of 
the whole Act is that which permits the continuance 
after the war of the policies taken out during the 
period of hostilities. Many who loyally support 
the Government's interference in private business 
as an emergency measure are bitter against what 
they deem to be the first step towards the perma- 
nent establishment of state-managed life insur- 
ance. 39 The much-debated Section provides, in a 
few words, that during the war, and thereafter un- 
til converted, policies shall be term insurance for 
successive terms of one year each; but, not less 
than five years after the end of the war, this insur- 
ance is to be converted, without medical examina- 
tion, into such form or forms as the insured may 
request and regulations may prescribe. These reg- 
ulations, moreover, must provide for the right to 
convert into ordinary life, twenty-payment life, 
endowment maturing at age sixty-two, and other 

33 Sec. 403 of the Act. 

39 See, for instance, the outraged protest of Arthur Richmond 
Marsh, in The Economic World, New Series, vol. XV, p. 344 (Mar. 
9, 1918). 



m WORKMEN'S COMPENSATION AND INSURANCE 

usual forms, and shall prescribe the time and 
method of payment of premiums ; but advance pay- 
ments are not to be required for periods of more 
[than one month each, and may be deducted from the 
[pay or deposit of the insured or otherwise made at 
Jus election. 40 

Enforcement by suit, in case of disagreement 
between the bureau and any beneficiary or bene- 
ficiaries as to a claim under one of these war risk 
insurance contracts, was provided for by Section 
1405 of the Act as originally passed. This section 
[was repealed by a law of May 20, 1918, which sub- 
stituted an amendment to Section 13 of the Act as 
originally passed, materially limiting the amount of 
compensation which attorneys and claim agents 
may receive. The new provision restricts the fee 
which may be charged for assisting a claimant in the 
preparation of his papers to three dollars ; and when 
the applicant and the bureau disagree on the 
amount payable, and suit is brought in the United 
States District Court, the former's attorney cannot 
claim more than 5% of the amount recovered. 
The asking or receiving of any other compensation 
in respect to the action by the attorney or claim 

40 Sec. 404 of the Act. 



THE SOLDIERS' AND SAILORS' INSURANCE ACT 293 

agent is not only made unlawful, but those who 
secure or attempt to secure fees not prescribed are 
liable to a $500 fine or two years' imprisonment, or 
both. 40a 

Some of the controversies to which Soldiers' and 
Sailors' Insurance has already given rise have been 
adverted to. The fear often expressed, that the 
new scheme is the entering wedge of Government 
monopoly of the entire insurance business, may or 
may not be well founded ; but the great and obvious 
desirability of having the policy taken out in war 
time form the basis of a permanent provision for 
that future which service in the armed forces 
renders especially uncertain because of present 
or potential disabilities acquired, has very prop- 
erly overridden the objections of selfish con- 
servatism. It has been suggested that free cover- 
age of all up to a certain sum would not only have 
been in keeping with the liberal policy of the Gov- 
ernment, but would more surely render unnecessary 
a resort to pensions after the war, by taking care of 
the rare instance where a soldier or sailor refuses to 
insure himself. 41 The answer to this criticism is 

40a Public, No. 151, 65th Congress (May 20, 1918). 

4i Such a suggestion was made, it seems, by the life underwriters 
of the country. The Weekly Underwriter, vol. XCVIII, p. 34 (Jan. 
12, 1918). 



294 WORKMEN'S COMPENSATION AND INSURANCE 

twofold: first, the number of Army and Navy men 
who have not taken out policies is negligible: 42 and 
secondly, these unusual cases may be provided for, 
at least in part, by the power given to the Secre- 
taries of War and of the Navy to compel the deposit 
to the enlisted man's credit of such portions of one- 
half of his pay as are not expended in allotments. 43 
The Act as originally drawn contemplated appli- 
cations for insurance only by the insured. This 
meant that the purpose of the whole scheme could 
be defeated, so far as the individual case was con- 
cerned, by the selfishness of a soldier who preferred 
a little extra spending money to the righteous satis- 
faction of leaving his family well provided for in 
case of his death. This defect in the law was early 
seized upon by the critics; and Congress has now 
amended the original statute to permit of persons 
other than the insured applying for policies. 44 The 
beneficiaries remain restricted as before; and the 

42 According to figures issued in March by the Secretary of the 
Treasury, over 90 per cent of the United States Army, here and 
abroad, have taken out insurance with the bureau. Official Bulletin, 
Mar. 18, 1918. 

43 See Sec. 203 of the Act. 

44 See Weekly Underwriter, vol. XCVIII, p. 381 (March 23, 1918), 
for editorial comment on the change effected in the Act by the 
Amendment, the increase in the number of policies which will result, 
and the opportunity for patriotic service on the part of life insurance 
men in aiding the scheme as expanded. 



THE SOLDIERS' AND SAILORS' INSURANCE ACT 295 

amendment takes its place as a worthy part of the 
general plan to provide so generously for fighting 
men and their families as to render extensive pen- 
sion legislation unnecessary. 



CHAPTER IX 

REQUISITES OF THE IDEAL LAW 

The many disadvantages of our state system, with 
the grotesque discrepancies between the fundamen- 
tals and commonplaces alike of the law of adjoin- 
ing jurisdictions to which it gives rise, are suffi- 
ciently obvious. But when legislation of a new 
type is afoot, our little commonwealths within a 
great commonwealth furnish an ideal stamping- 
ground, an experimental field where all the varia- 
tions and modifications of the novel principle can be 
tried and studied, with a view to determining the 
ideal form which such legislation should take. 
These experiments are costly, but, if conducted and 
compared with intelligence, will help to substitute 
for guesswork something like scientific accuracy. 

This country has now witnessed nearly eight 
years of experiments in workmen's compensation. 
In that time, almost every conceivable variation 
of the principle has been attempted, from elective 
compensation acts applicable to a few employments 

296 



REQUISITES OF THE IDEAL LAW 297 

to compulsory state insurance laws covering prac- 
tically all. The desire for uniformity, and more 
particularly for uniform accuracy is keenly felt ; 1 
and now that our legislators have had the benefit of 
several years of American and many of foreign ex- 
perience, it would seem that they should be in a 
position to gratify it. 

That admirable body of public-spirited men, the 
Commissioners on Uniform State Laws, have un- 
dertaken to draft a Uniform Workmen's Compen- 
sation act, the adoption of which they have urged 
on all the states, and which was enacted into law in 
1915 in the Territory of Hawaii, and, with some 
modifications, in Vermont. 2 The plan provides for 
compulsory compensation, with either insurance or 
security, but with no State insurance. As so out- 
lined, I do not wholly agree to it, and in the fol- 
lowing pages I will endeavor to indicate what I 
conceive to be the requisites of an ideally adequate 
and comprehensive law which might be enacted in 
all jurisdictions throughout the United States. 

The model statute should, first of all, be compul- 
sory. At this stage of the development of the com- 

i W. C. Fisher in Amer. Economic Review, vol. V, p. 226 (June, 
1915). 

2 Hawaii Acts 1915, No. 221; Vt. Acts 1915, c. 164, as amended by 
Acts 1917, c. 171, 173, 176. 



298 WORKMEN'S COMPENSATION AND INSURANCE 

pensation principle, it is almost universally con- 
ceded that such laws should be compulsory, and that 
the only reason for making them elective in form 
has been to avoid possible constitutional objections. 3 
As we have seen, state legislatures imbued with the 
spirit of progress, but restrained by a craven fear 
of having their enactments overthrown by the 
courts, have endeavored, by raising presumptions of 
acceptance and by other means, to make nominally 
elective laws compulsory in fact ; these are disgrace- 
ful subterfuges, and inexcusable in this day and 
age. If constitutional provisions are so antiquated 
or inelastic as to stand in the way of needed labor 
legislation, they should go ; the path of amendment 
is open to all, and has been availed of in many 
states. The elective method is needlessly compli- 
cated and cumbersome in operation; compulsory 
laws are simpler, more intelligible, less expensive to 
administer, and more just because more uniform 
and certain. 

The field of compensation should be as broad as 
possible. It is hard to see on what principle the 
exception of any employment in which an industrial 
accident may happen can be supported. Certainly 

3 Lewis C. Williams in Case and Comment, vol. .22, p. 296 (Septem- 
ber, 1915). 



REQUISITES OF THE IDEAL LAW 299 

the restriction of a compensation statute to "extra- 
hazardous" employments has no foundation in rea- 
son; for the workman who is injured by a rare acci- 
dent suffers just as much, and he and his depend- 
ents are as likely to become a charge on the com- 
munity, as one who falls a prey to a more common 
mishap. There was an economic reason, to be sure, 
for the early restriction of compensation to extra- 
hazardous employments, for it was there that the 
pressure of resulting poverty first began to be felt ; 
but from the beginning this was a compromise, and 
it is one which can hardly be defended now. 

Various state statutes have excluded casual work- 
ers, outwwkers, public employees, and those draw- 
ing a salary of more than a certain amount a year. 
These restrictions, too, are illogical and often un- 
just. In the case of Joseph C. Gaynor, referred 
to elsewhere in this volume, the widow of a waiter 
who was killed by an accident arising out of and in 
the course of his employment, was not permitted 
to recover compensation under the Massachusetts 
statute because he was technically a casual em- 
ployee, hired by the job, though his employer al- 
ways engaged him that way. 4 This result was 
cruelly unjust; but such a situation is not uncom- 

* Joseph C. Gaynor's Case, 217 Mass. 86. 



300 WORKMEN'S COMPENSATION AND INSURANCE 

mon where the rule as to casual employees is in 
effect. 

Outworkers — those who do the employer's work 
in their own homes, such as laundresses, — are not 
covered by many of our statutes. This exclusion 
"implies a retention of some part of the old doctrine 
of liability as conditioned upon personal fault," 5 
and is indefensible in a workman's compensation 
law. Distinctions on the basis of earnings fail to 
meet with the approval of those of us who believe 
that compensation awards are part of the just re- 
turn for services rendered; the fact that a man is 
making a comfortable salary before injury will 
make his case less imperative than that of a laborer 
barely able to live on his wages, but it should not 
deprive him of his right under an adequate law. 
Public employees should be included, since the pub- 
lic ought to be a model employer. 6 And the ex- 
clusion of those not serving in the master's trade or 
business — a class embracing college professors, min- 
isters, men engaged to do interior decorating or 
some such service of luxury for a private house- 
holder — needs but to be mentioned to be shown 
arbitrary and absurd. In short, I am fully con- 

sW. C. Fisher in Amer. Economic Review, vol. V, p. 242 (June, 
1915). 

s Ibid., p. 240. 



REQUISITES OF THE IDEAL LAW 301 

vinced that only a law covering all employments, 
for what purpose soever, will give permanent satis- 
faction. 68 

The injuries covered should be all those directly 
or indirectly due to the employment. This should 
include the entire field of industrial accidents so- 
called, and in addition disease traceable to the na- 
ture of the occupation. I am not prepared to say 
that we should go the whole length of the German 
plan in compelling insurance against all sickness, 
invalidity and old age. Such a measure, passed by 
Congress and applicable not merely to employees 
but to the entire population, might be one way of 
eradicating the "deserving poor" ; but I do not think 
it advisable or just to lay upon employers the bur- 
den of supporting victims of all mortal ills simply 
because they happen to be employees. 

Conditions of forfeiture present a perplexing 
question. On the one hand, we have the settled 
principle that under workmen's compensation laws 
negligence of the employee is immaterial; and on 
the other, the apparent injustice of mulcting the 
employer where that negligence was gross and in- 
excusable. Practical considerations, however, de- 

ea "A perfect scheme of compensation should cover all employ- 
ments without exception." Blanchard, Liability and Compensation 
Insurance, p. 109. 



302 WORKMEN'S COMPENSATION AND INSURANCE 

termine the matter in favor of awarding compensa- 
tion even in such cases ; for gross carelessness on the 
part of the workman where his own safety is con- 
cerned is so exceptional as not to constitute a serious 
problem; and the litigation in which we would at 
once be plunged as soon as we began to consider 
degrees of negligence would defeat one of the prin- 
cipal aims of the compensation system — to diminish 
the cost of determining questions of liability for in- 
dustrial injuries. 

Clearly, however, the ideal law would not permit 
a workman to recover from his employer for self- 
inflicted injuries. Pity for the man's family and 
dependents may be aroused in such a case ; but I am 
afraid that in an instance of this sort they must be 
left to suffer. Examples of this kind of depravity 
among workingmen are fortunately rare ; but to en- 
courage it by granting compensation in such cases 
is unthinkable, either from an economic or a moral 
point of view. The tribunal administering the law 
should insist, of course, that proof of the self- 
infliction of an injury should be clear and un- 
equivocal. 

Considerations of public policy are not so imper- 
ative, however, in the case of intoxication. So long 
as the law sees fit to permit the sale of liquor in 



REQUISITES OF THE IDEM, LAW 303 

public-houses, workingmen will be subjected to 
what is commonly called temptation, but which is 
more often infection. For alcoholism is a disease, 
and those especially susceptible to it are more to 
be pitied than scorned. Excluding intoxicated 
workmen from compensation benefits might have 
some slight effect in diminishing drunkenness, 
though it is a very indirect and uncertain way of 
accomplishing that end; but on the other hand it 
would work some hardship on the weak but not vi- 
cious drinker, and a very great injustice on his help- 
less dependents. On the whole, I think intoxication 
of the injured workman should not operate to bar 
his claim to compensation; and only for self-in- 
flicted injury should forfeiture be provided. 

The purpose of the "waiting period," as has been 
explained in a previous chapter, is two- fold — to 
relieve the administration of the compensation act 
from the burden and confusion of payments for 
trifling injuries, and to discourage malingering. 7 
But if the interval is a long one, a laborer and his 
dependents are apt to be thrown in the meantime 
into the extremes of poverty, and are sometimes 
forced to accept charity to keep from starvation. 

7 Amer. Labor Legislation Review, vol. V, no. 1, Publication 28, at 
p. 76 (March, 1915). 



304 WORKMEN'S COMPENSATION AND INSURANCE 

So the ideal law would provide for the shortest 
waiting period consistent with the accomplishment 
of the purposes mentioned. Two weeks, the com- 
monest period in our states, is too long ; I would set 
it at not more than three or four days. 7a If the 
laborer is disabled longer than that, he should be 
permitted to claim compensation from the date of 
the injury. 

After much consideration, and changing my mind 
more than once, I have come to the conclusion that 
the ideal law should provide for a state insurance 
fund, in which employers should be forced to in- 
sure. It is in the interest of the public that useful 
business concerns should remain solvent; and the 
temptation to which the individual employer is sub- 
jected, where insurance is not compulsory, to take a 
gambler's chance and avoid the payment of the 
premiums, is conducive to unsound financial condi- 
tions. "But why not insurance in private com- 
panies?" — it may be asked. Because centraliza- 
tion means cheaper and more efficient management ; 

7a "The waiting period in all cases should be reduced from fourteen 
days to four days." McCanna, The New Era, p. 83. Where the 
waiting period is two weeks, with full payment from date of injury 
if the disability lasts that long, the temptation of an employee only 
slightly injured to malinger and prolong the disability is tremendous. 
See, on this point, Blanchard, Liability and Compensation Insur- 
ance, p. 115. 



REQUISITES OF THE IDEAL LAW 305 

because stability is essential, and it is better assured 
by having the state back up the plan than by leaving 
it to private concerns; because the lower the pre- 
miums, consistent with safety, the better for the 
parties and the public, and insuring with the state 
eliminates the element of private profit ; because the 
whole matter is a public affair, of which the people, 
through their elected representatives, should have 
the ultimate management. 

At what rates should payments be made under 
the ideal law? In the case of total disability, the 
rate should be substantial but not too high. Where 
full wages are paid, experience has shown that vol- 
untary idleness and malingering are encouraged. 8 
Probably two-thirds or 66%% of the average 
weekly earnings is sufficient ; where wages are very 
low, there should be a minimum payment graded 
according to the number of dependents. 

Where disability is partial, the problem is more 
difficult. The original idea was to estimate pay- 
ments on the basis of the decrease of earning capac- 
ity. This is an excellent scheme when the partial 
disability is only temporary ; but where it is perma- 
nent that solution is not so satisfactory. Loss of an 

s Lindley D. Clark in Journal of Political Economy, vol. XXIII, p. 
809 (October, 1915). 



306 WORKMEN'S COMPENSATION AND INSURANCE 

eye, for instance, may not very seriously impair the 
present earning capacity of a section-hand; but it 
may make him incapable of ever being promoted to 
brakeman. In other words, the prospective effect 
of an injury should be taken into account in mak- 
ing awards. 

Perhaps the least satisfactory way of graduating 
awards is by the flat rate schedule. So many dol- 
lars for a right arm, so many dollars for a broken 
rib — the sound of it is disgustingly commercial, and 
the results are very far from just. Yet to make 
such payments in addition to the sums estimated on 
the basis of loss of earning power, present and pro- 
spective, is perhaps to approximate justice more 
closely than by any other method. For disfigure- 
ment, too, though unaccompanied by physical dis- 
ability, compensation should be given, both because 
of the real suffering and inconvenience caused, and 
because disfigurement almost invariably has an un- 
favorable influence on earning capacity. 

Death benefits should be higher, in the writer's 
opinion, than they are at present; and they should 
not be the same regardless of the number of de- 
pendents, as they are in too many states. The 
New York system commends itself most favorably 
to me, with its percentage to the widow, so much 



REQUISITES OF THE IDEAL LAW 307 

more for each minor child, etc. But the total 
should not be restricted, as in that state, to two- 
thirds of the average earnings and not to exceed a 
certain lump sum. The ideal law would give only- 
burial expenses, if there were no dependents ; in the 
case of minor children, payments until they attained 
full age ; where there is a widow, a life pension ; and 
the total of payments, if there are enough depend- 
ents, might equal the full wages of the deceased. 
In this way, there would be no substantial increase 
in the gross amount paid as compensation, since in 
the many cases in which the deceased was without 
a family or with only one or two immediate rela- 
tives, the disbursements would actually be dimin- 
ished; yet where the dependents were many, some- 
thing approaching adequate compensation would be 
assured. 

One other requisite of the ideal law must be men- 
tioned before we close. That is adequate provision 
for prompt and effective administration. In a few 
states, this matter is left to the courts ; but, as might 
have been expected, this has proven very unsatis- 
factory. 9 Industrial commissions have undertaken 

» See article entitled "Three years under the New Jersey Work- 
men's Compensation Law" in the American Labor Legislation Re- 
view, vol. V, no. 1, Publication 28, pages 36-102, for a withering de- 
nunciation of the method of administration by the courts. 



308 WORKMEN'S COMPENSATION AND INSURANCE 

the task in other jurisdictions, deriving their powersr 
from various sources ; and a power of general super- 
vision is sometimes given to the state Insurance 
Commissioner. 

An Insurance Board appointed by the Governor, 
subject to certain restrictions, appeals to me as the 
body best qualified to administer the ideal statute. 
Such a board's personnel would be limited to practi- 
cal actuaries, lawyers and others with special expe- 
rience in insurance matters, physicians, and perhaps 
one representative each from the labor unions and 
the employers. Sittings should be frequent in all 
towns of the state ; and before the board should be 
brought not only cases arising in such towns, but 
also the evidence collected by traveling agents in 
outlying districts. In order to induce the prompt 
settlement of all claims before such agents without 
the necessity of appeal to the board, costs should be 
collected from all employers who refuse to abide 
by the decision of the local agent and appeal un- 
successfully; similarly, employees appealing with- 
out success for increase of compensation would be 
mulcted, though they should be permitted to be 
heard before the board without penalty in case no 
award at all was made in their favor at the original 
hearing. 



REQUISITES OF THE IDEAL LAW 309 

The suggestions made in this chapter have been 
based on some study of the laws now in force in 
Europe and America ; but it would be folly to pre- 
tend that ultimate wisdom on the subject of work- 
men's compensation, so spectacular in its past 
development and so fruitful of possibilities for the 
future, can ever be confined within the limits of a 
rigid formula. Of one proposition, however, the 
writer is firmly convinced, despite some indications 
to the contrary; the American states, sooner or 
later, will be driven or persuaded to adopt compul- 
sory state insurance laws as the only satisfactory 
solution of the problem of compensation to injured 
workingmen. 



BIBLIOGRAPHY 

Note : No attempt has been made in the follow- 
ing pages to give anything like an exhaustive bibli- 
ography of the subject of Workmen's Compensa- 
tion and Employers' Liability. Such an under- 
taking would result in filling two or three volumes 
at least; even the Select List of References pub- 
lished by the Government Printing Office of the 
United States in 1911, before the avalanche of lit- 
erature on the subject in this country began, is 196 
pages in length. This Bibliography, therefore, 
refers only to the most important books, magazine 
articles, etc., which have proved useful in the prepa- 
ration of the present work. 

SOURCES 

These are too many and varied to be listed here. 
They consist of statutes, reported cases, reports of 
state commissions on Workmen's Compensation 
and Employers' Liability, reports of various bodies 
such as the American Federation of Labor which 
have discussed the subject with which we are deal- 

311 



812 BIBLIOGRAPHY 

ing, government publications (especially the inval- 
uable reviews and special reports of the U. S. 
Bureau of Labor Statistics), and a wide range of 
pamphlet literature, including propaganda distrib- 
uted by the insurance companies in their war on 
the state fund idea, etc., etc. 

The Digests published by the Workmen's Com- 
pensation Publicity Bureau are of great value in 
supplementing the texts of the statutes. Revised 
editions are gotten out every year in November or 
December by the Bureau at its office, 80 Maiden 
Lane, New York City. 

The Select List of References on Employers' 
Liability and Workmen's Compensation, compiled 
under the direction of Hermann Henry Bernard 
Meyer, Chief Bibliographer, and published by the 
U. S. Government Printing Office at Washington, 
remains the most exhaustive collection of references 
on the earlier phases of the movement. Published 
1911. 

BOOKS 

Willoughby, William Franklin — Workingmen's Insurance — New 
York: T. Y. Crowell & Co. (1898)— 386 pp. 

Ruegg, A. H.— Law of Employer and Workman in England — Lon- 
don: William Clowes & Sons, Ltd. (1905)— 199 pp. 

Lewis, Frank W. — State Insurance — Boston: Houghton, Mifflin & 
Co. (1909)— 225 pp. 

Henderson, Charles Richmond — Industrial Insurance in the United 
States — Chicago: University of Chicago Press (1909) — 129 pp. 



BIBLIOGRAPHY 313 

Downey, E. H. — History of Labor Legislation in Iowa — Iowa City: 
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Eastman, Crystal — Work-Accidents and the Law — New York: 
Charities Publication Committee (1910)— 331 pp. 

Frankel, Lee K. and Dawson, Miles M. — Workingmen's Insurance 
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— 433 pp. 

Randolph, Carman F. — Brief on the Legal Aspects of Systematic 
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Seager, Henry Rogers — Social Insurance — New York: The Macmil- 
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Campbell, Gilbert Lewis — Industrial Accidents and Their Compen- 
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Dawbarn, C. Y. C. — Employers' Liability and Workmen's Compen- 
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1911). 

Dawson, Wtlliam Harbtttt — Social Insurance in Germany, 1883- 
1911— London: T. Fisher Unwin (1911)— 279 pp. 

Rubinow, I. M. — Studies in Workmen's Insurance: Italy, Russia, 
Spain— New York: (1911)— 2376 pp. 

Downey, E. H. — History of Work Accident Indemnity in Iowa — 
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Money, L. G. Chiozza — Insurance Versus Poverty — London: Me- 
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Burdick, Francis M. — The Law of Torts — New York: Banks Law 
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Rubinow, I. M; — Social Insurance — New York: Henry Holt §t Co. 
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Boyd, James Harrington — A Treatise on the Law of Compensation 
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Holmwood, William E. — New Jersey Employers' Liability Act- 
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314. BIBLIOGRAPHY 

Marot, Helen — American Labor Unions — -New York: Henry Holt & 
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Cole, G. D. H.— The World of Labour— London : G. Bell & Sons, Ltd. 
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Rickey's Federal Employers' Liability, Safety Appliance, and 
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BIBLIOGRAPHY 315 

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Hamilton, Grant — Trade Unions and Social Insurance — American 
Federationist, vol. XXIV, no. 2, pages 122-125 (February, 1917). 



318 BIBLIOGRAPHY 

Dwight, Edmund — The Risk and Development of Employment Lia- 
bility Insurance — Economic World, vol. 99, pp. 311-314 (March 
3, 1917). 

Sherman, P. Tecumseh — Compensation for Industrial Diseases — 
University of Pennsylvania Law Review, vol. 65, pp. 513-526 
(April, 1917). 

Review of Labor Legislation of 1917, especially portion on Social 
Insurance — American Labor Legislation Review, vol. VII, no. 3, 
Publication 38, pp. 573-594 (September, 1917). 

Adriance, Walter M. — Workmen's Compensation in New Jersey — 
American Economic Review, vol. VII, pp. 712-713 (September, 
1917). 

Poweljl Thomas Reed — The Workmen's Compensation Cases — Politi- 
cal Science Quarterly, vol. XXXII, pp. 542-569 (December, 
1917). 

Black, Henry Campbell — Progressive Legislation, the Constitution, 
and the Supreme Court — The Constitutional Review, vol. II, pp. 
19-29 (January, 1918). 

The Army and Navy Insurance Act (editorial) — Case and Com- 
ment, vol. XXIV, pp. 655-656 (January, 1918). 

Wylie, George W. — Admiralty versus Compensation — American Law 
Review, vol. LII, pp. 63-71 (January-February, 1918). 

Workmen's Compensation Acts in the Unitej) States (part of con- 
tinued article) — The Lawyer and Banker, vol. XI, pp. 65-74 
(January-February, 1918). 

Angell, Ernest — Recovery Under Workmen's Compensation Acts 
for Injury Abroad — 31 Harvard Law Review, pp. 619-636 (Feb- 
ruary, 1918). 

Gephart, W. F. — The War Risk Insurance Act of the United States 
— American Economic Review, vol. VIII, pp. 195-202 (March, 
1918). 

Douglas, Paul H. — The War Risk Insurance Act — The Journal of 
Political Economy, vol. XXVI, pp. 461-483 (May, 1918). 



INDEX 



"Accident" construed by English 

courts, 38, 39 
Accident prevention 
control of insurance rates as 

bringing about, 132, 133 
German safety regulations, 27, 

28 
methods of accomplishing, 131, 

132* 
problem of, 129-133 
statistics, 14, 131 
statutory provisions, 130, 131 
Administration, methods of 

court system criticized, 121-124, 

214-224 
court system in New Jersey, 

211-225 
ideal system, 125, 126 
labor opinions on, 260-263 
new administrative machinery in 
New Jersey, 224-225, 232-238 
typical statutory provisions, 

124, 125 
under ideal law, 307, 308 
Alaska, forfeiture for miscon- 
duct under act, 102 
Alberta, compensation law en- 
acted, 49 
Appeals, German law, 27 
Arizona 

injuries covered by act, 99 
. labor opinion on methods of ad- 
ministration, 262 
labor opinion on waiting period, 
256 

319 



Arkansas, labor opinion on ex- 
clusion of casual employees, 
257 
Assumption of risk, doctrine of 

(see Common Law) 
Atlantic City, Workmen's Com- 
pensation conference, 53 
Australian provinces, compensa- 
tion laws enacted, 48, 49 
Austria, compulsory insurance 

law, 47 
Awards 
absence of experience on which 

to base, 108 
limitations on, in general, 108- 

110 
lump sum payments, 114 
nature of, in American acts, 

108-114 
requisites of proper schedules, 

110-113 
schedules of disabilities, 109, 

'110 
under ideal law, 304-307 
under New Jersey act, 195-207 
under Soldiers' and Sailors' In- 
surance Act, 275-278 



B 



Belgium, compensation law, 48 

British Columbia, compensation 
law enacted, 49 

Bulgaria, compensation law en- 
acted, 49 

Burial expenses, German law, 27 



w 



320 



INDEX 



California 

accident prevention provisions, 
130 

awards under act, 109 

coverage of occupational dis- 
ease, 97 

distribution of compensation in- 
surance among carriers, 162, 
163 

forfeiture for misconduct under 
act, 103 

labor opinion on employments 
covered, 257 

labor opinion on methods of 
administration, 261 

labor opinion on waiting pe- 
riod, 255 

"Labor Record" of Senators 
and Assemblymen, 240 

medical and surgical aid pro- 
visions, 119 

success of state fund, 149-152 
Cape of Good Hope, compensa- 
tion law enacted, 48 
Casual employments 

not covered by most acts, 90 

not covered in New Jersey, 186, 
187 

not covered by recent acts, 94 

would be covered by ideal law, 
299, 300 
Charitable workers 

not covered by some compen- 
sation laws, 92 

not covered in Idaho, 94 
Clerical workers, not covered by 

Iowa act, 92 
Colorado, 

forfeiture for misconduct un- 
der act, 101 



injuries covered by act, 99 
Common employment, doctrine of 
(see Fellow Servant Rule; 
Common law) 
Common law 
assumption of risk, doctrine of, 

7,8 
contributory negligence rule, 5 
early dissatisfaction with, in 

United States, 49 
employers' duties, 8, 9 
fellow-servant rule, 5-7 
negligence, liability for, 4 
workmen's compensation dis- 
tinguished, 10-12 
Compensation (see other titles; as 
to soldiers and sailors, see 
Insurance, Soldiers' and Sail- 
ors') 
Compulsory principle 

adopted completely in some 

states, 107 
effect of deprivation of com- 
mon law defenses, 105, 106 
few states frankly adopt, 105 
presumption of acceptance, 106, 

107 
should be found in ideal law, 
297, 298 
Constitutionality 
a compensation problem, 57 
amendments to avoid question, 

69 
compulsory law upheld, 77 
doctrine of, 56 

Illinois law partially invalid, 67 
Iowa law upheld, 81 
Ives case, 59, 77, 81, 82, 180 
Kentucky law invalid, 68 
Kentucky law upheld, 68 
liability without fault, 58 



INDEX 



321 



Maryland law of 1902 invalid, 

59 
Montana law invalid, 63, 64 
New Jersey law upheld, 66 
New Jersey scheme, 65, 66 
New York law invalid, 59 
New York law upheld, 77-80 
no longer a vital issue, 82, 83 
of abolition of common law de- 
fenses, 74, 75 
Ohio law upheld, 76 
Texas law construed, 69-74 
Texas law upheld, 72-74 
voluntary law upheld, 76 
Washington law upheld, 61, 62 
Contributory negligence rule (see 

Common law) 
Courter v. Simpson Construction 

Co., 67 
Courts, administration by (see 
Administration, methods of) 
Cunningham v. Northwestern Im- 
provement Co., 63, 64 



D 



Definitions 

Employers' Liability, 12 

State Insurance, 13 

Workmen's Compensation, 3 
Delaware 

accident prevention provisions, 
130 

employments not covered by 
act, 94 

forfeiture for misconduct un- 
der act, 102, 103 

limited coverage of disease by 
act, 96 

medical and surgical aid pro- 
visions, 118 



Denmark, compensation law, 47, 

48 
Disease (see also Disease, Occu- 
pational) 

"injury" sometimes construed 
to include, 95, 96 

resulting from accident, 96, 97 

to what extent covered by vari- 
ous statutes, 96, 97 
Disease, Occupational 

coverage by California law, 97 

English law, 39, 40 

in New Jersey, 189-195 

judicial construction in favor 
of coverage, 98, 99 

labor opinion with regard to, 
259-260 

not covered by most compensa- 
tion laws, 97 

reasons for coverage by com- 
pensation laws, 97-99 

would be covered by ideal law, 
301 
Diseases, Industrial (see Disease, 

Occupational) 
Domestic Service 

coverage in New Jersey, 85 

not covered in many states, 89, 



E 



Economic basis of Workmen's 
Compensation (see Work- 
men's Compensation) 

Election of remedies, by English 
workman, 45, 46 

Elective officials 
not compensated in New Jer- 
sey, 187, 188 
not covered in Idaho or Utah, 
94 



INDEX 



Employees, Federal (see United 

States) 
Employments, casual (see Casual 

Employments) 
Employments covered by com- 
pensation laws 

in England, 36, 37 

in Germany, 26 

in United States, 85-94 

under ideal law, 298-301 

under New Jersey act, 185-189 
Employments, public 

at more than $1200 a year in 
New Jersey, 187-188 

coverage (general) in New 
Jersey, 85 

coverage in general, 92, 93, 94 

coverage under Federal act, 
85 

should be included under ideal 
law, 300 
Employers' liability 

at common law, 4-9 

denned, 12 

German act of 1871, 23 

statistics, 17 
Employers' Liability Commission 

(see New Jersey) 
England 

absence of insurance features in 
act criticized, 137-139 

"accident" construed by courts, 
38,39 

compensation, when payable, 
37,38 

election of remedies by work- 
men, 45, 46 

Employers' Liability Act, 1880, 
33-35 

employments subject to com- 
pensation, 36, 37 



fellow-servant rule extended, 
32, 33 

industrial diseases, when com- 
pensated, 39, 40 

National Insurance Act, 1911, 
46 

"out of and in the course of em- 
ployment" construed, 40-43 

"serious and wilful misconduct" 
construed, 44 

sub-contractors, 44, 45 

vocational training for disabled 
soldiers and sailors, 284 

workingmen's insurance by pri- 
vate agencies, 46, 47 

Workmen's' Compensation Act, 
1897, 35 

Workmen's Compensation Act 
of 1906 passed, 35, 36 
Extraterritorial effect 

judicial holdings regarding, 
128 

legislative provisions, 128 

problem of, 126-129 



Family, members of employer's 
not covered by some acts, 92, 
94 

Farm labor 
covered in New Jersey, 85 
not covered in most states, 89 r 
90 

Federal employees (see United 
States) 

Fellow-servant rule (see Common 
Law; also England) 

Finland, compensation law en- 
acted, 48 



INDEX 



323 



Florida, labor opinion on methods 
of administration, 261 

Forfeiture for misconduct (see 
Misconduct, Forfeiture for) 

France, compensation law en- 
acted, 47 



G 



Georgia, labor opinion on meth- 
ods of administration, 261, 
262 
Germany 

accident insurance enactments, 
25 

appeals from trade association 
findings, 21 

Agricultural insurance law, 28 

Building Trades accident insur- 
ance law, 28 

burial expenses of workman ac- 
cidentally killed, 27 

compulsory insurance adopted, 
22,24 

confusion in statistical meth- 
ods, 108 

contributions to insurance 
funds, 26 

early laws of the states, 22, 23 

Employers' Liability Law of 
1871, 23 

employments subject to indus- 
trial insurance, 26 

first modern compensation law, 
20 

invalidity insurance, 29, 30 

Marine accident insurance law, 



pensions to injured workmen, 

26, 27 
philosophic influences, 21 
Prussian Act of 1838, 22 
safety regulations, 27, 28 
Sick Insurance Act, 1883, 24, 

25 
survivors' insurance, 30 
voluntary insurance law of 

1876, 23, 24 
waiting period, 27 
Workmen's Insurance Code, 
1911, 30 
Greece, compensation law en- 
acted, 48 
Greene v. Caldwell, 68 



H 



Hawaii 
forfeiture for misconduct un- 
der act, 102 
limited coverage of disease by 
act, 96 
Hazardous employments 
coverage in Kansas, 87, 88 
coverage in laws recently 

passed, 94 
coverage in New York, 86 
favored in compensation legis- 
lation, 86 
Holland, compulsory insurance 

law, 48 
Hungary, compensation law en- 
acted, 48 



medical care of injured work- 
men, 26 
old age insurance, 29, 30 



Idaho 
compulsory principle adopted, 
107 



INDEX 



employments not covered by- 
act, 94 

farm and domestic labor not 
covered by act, 89 

forfeiture for misconduct un- 
der act, 102 

insurance experience, 154, 155 

labor opinion on methods of 
administration, 262 

labor opinion on waiting pe- 
riod, 255 

medical and surgical aid pro- 
visions, 119 

method of administering act, 
124, 125 
Ideal law, requisites of (see 
also other titles), general 
discussion, 296-309 
Illinois, compensation law par- 
tially invalid, 67 
Indiana, limited coverage of dis- 
ease by act, 96 
Industrial diseases (see Disease, 

Occupational) 
"Injury" 

when includes disease, 96 

word liberally construed by 
courts, 95 
Insurance (see also Insurance, 
Soldiers' and Sailors') 

absence of provisions in Eng- 
lish law criticized, 137-139 

by private agencies in England, 
46, 47 

competitive, tendency to un- 
dermine security, 161 

compulsory, adopted in foreign 
countries, 22, 24, 47, 48 

compulsory, adopted in some 
American states, 136 

experience rating, 174-176 



invalidity, German law, 29, 30 

merit rating, 170-176 

mutual, accident prevention 
tendency, 172-173 

mutual, cost of, 164 

mutual, discussion of, 162-164 

mutual, experience in Massa- 
chusetts, 152-154 

mutual, experience in Wiscon- 
sin, 154 

necessity of, 134-140 

old age, German law, 29, 30 

private, excessive premiums in 
Iowa, 154, 155 

private, good work done by, 
160, 161 

private, high cost of, 164, 165 

private, questionable practices, 
145 

propaganda of private carriers, 
140, 141 

reciprocal or inter-insurance, 
176 

rival methods mentioned, 140 

schedule rating, 174 

self-insurance, 176 

social, labor opposed to, 242- 
247 

state, accident prevention ten- 
dency, 170-176 

state, adoption urged, 141, 142 

state, arguments against, 142- 
149 

state, defects of Nevada act, 
158, 159 

state, denned, 13 

state, disadvantage of different 
laws, 177 

state, economy of, 164-165 

state, equitable distribution of 
accident cost, 167-169 



INDEX 



state, experience in Montana, 
155 

state, experience in New York, 
157, 158 

state, experience in Ohio, 156, 
157 

state, experience in West Vir- 
ginia, 156 

state, in several American jur- 
isdictions, 141 

state, general success of, 159, 
160 

state, security of, 166, 167 

state, success in California, 
149-152 

state, success in Maryland, 
152 

under ideal law, 304, 305 

under New Jersey law, 207-211 

voluntary, under German act 
of 1876, 23, 24 

Workmen's Compensation Pub- 
licity Bureau, 140 

Workmen's Compensation Ser- 
vice Bureau, 140, 161 
Insurance, Soldiers' and Sailors' 

Act passed, 265 

allotments and allowances, 268- 
274 

attorneys and claim agents 
regulated, 292-293 

compensation provisions, 268, 
275-282 

conditions of forfeiture, in 
general, 280 

coverage provided for, 288-289 

criticism of continuing policies 
after war, 291 

defects of the pension system, 
266-267 

Division to administer act, 268 



English precedent in vocational 
training, 284 

features of act, in general, 
268 

forfeiture for misconduct, 275 

for what injuries compensation 
paid, in general, 275 

insurance provisions of act, 
286-295 

medical and surgical aid, 279 

miscellaneous provisions, 281- 
282 

need for vocational training, 
285 

others than insured may apply 
for policies, 294-295 

philanthropic and practical as- 
pects, 286-287 

prohibitive rates one reason for 
act, 269 

provisions of policy, in gen- 
eral, 289-290 

schedule of payments, 270-273 

schedule of payments, 275-278 

scheme the outcome of coopera- 
tion, 268-269 

some common criticisms of 
scheme, 293-294 

social problem of war risks, 
265-266 

things essential to success of 
scheme, 267, 268 

time limitations on awards, 281 

vocational training, 268, 282- 
285 

voluntary and compulsory al- 
lotments, 269-270 

will help to prevent pensions 
scandals, 287-288 

where no allotments made, 273- 
274 



326 



INDEX 



Iowa 

clerical and other employees 
excluded from compensation, 
89, 92 

compensation law upheld, 81 

insurance experience, 154, 155 

labor opinion on methods of 
administration, 262 

labor opinion on waiting pe- 
riod, 255 

limited coverage of disease by 
act, 96 

medical and surgical aid pro- 
visions, 119 

method of administering act, 
124, 125 
Italy, compulsory insurance law, 

48 
Ives v. South Buffalo Ry. Co. 

(see Constitutionality) 
Ives case (see Constitutionality) 



Japan, compensation law enacted, 

49 
Jeffrey Manufacturing Co. v. 

Blagg, 76 
Jensen v. Southern Pacific Co., 

77-79 



K 



Kansas 

awards under act, 109, 113 

disease not mentioned in act, 
96 

employments covered by com- 
pensation law, 87, 88 

labor opinion on schedule of 
awards, 252 

labor opinion on waiting pe- 
riod, 255 



medical and surgical aid pro- 
visions, 119 
Kentucky 

first compensation law invalid, 
68 

labor opinion on methods of 
administration, 261 

labor opinion on schedule of 
awards, 251 

labor opinion on waiting pe- 
riod, 256 

second compensation law up- 
held, 68 
Kentucky State Journal Co. v. 
Workmen's Compensation 
Board, 68 



Labor 

American Federation of, 240, 
245, 249, 250, 258, 259, 263 

favors compensation laws, 241, 
242 

favors compulsory laws, 247- 
249 

influence of organized, 239-241 

opinions on basis for compen- 
sation rates, 249-253 

opinions on employments cov- 
ered, 256-259 

opinions on methods of ad- 
ministration, 260-263 

opinions on occupational dis- 
ease, 259-260 

opinions on waiting period, 
253-256 

opposed to social insurance, 
242-247 

sentiment shifting, 263-264 
Liability, employers' (see Em- 
ployers' Liability) 



INDEX 



327 



Liability without fault (see Con- 
stitutionality) 

Liechtenstein, compensation law 
enacted, 48 

Louisiana, forfeiture for miscon- 
duct under act, 102 

Luxembourg, compensation law 
enacted, 48 



M 



Maine, forfeiture for intoxication 

under act, 104 
Malingering, payment of full 
wages as compensation en- 
courages, 52, 205 
Manitoba, compensation law en- 
acted, 49 
Maryland 

act of 1902 declared unconsti- 
tutional, 50 t 59 

compulsory principle adopted 
in act, 107 

forfeiture for misconduct un- 
der act, 102 

insurance provisions of act, 
136 

labor opinion on employments 
covered, 257 

labor opinion on schedule of 
awards, 251 

labor opinion on waiting pe- 
riod, 256 

state insurance fund, 141, 152 
Massachusetts 

abolition of common law de- 
fenses, 105, 106 

accident prevention provisions, 
130, 131 

committee on relations of em- 
ployer and employed, 50 



disease not mentioned in act, 
96 

employments covered by com- 
pensation law, 88 

forfeiture for misconduct un- 
der act, 102 

insurance experience, 152-154 

labor's opinion on compensa- 
tion rates, 250 

labor's opinion on waiting pe- 
riod, 256 

methods of administration of 
act, 124 

mutual insurance in, 163 
Medical and surgical aid 

German law regarding, 26 

in New Jersey, 198, 199 

necessity of, 117-120 

provisions in American acts, 
118, 119 

selection of physician, 120, 121 

under Soldiers' and Sailors' In- 
surance Act, 279 
Memphis Cotton Oil Co. v. Tol- 

bert, 69 
Mexico, compensation law en- 
acted, 49 
Michigan 

disease not mentioned in act, 
96 

employments covered by com- 
pensation law, 89 

state insurance fund, 141 
Middleton v. Texas Light and 

Power Co., 70-74 
Minnesota 

commission of inquiry, 53 

disease not mentioned in act, 
96 

farm and domestic labor not 
covered by act, 89 



328 



INDEX 



forfeiture for misconduct un- 
der act, 102 

labor opinion on waiting pe- 
riod, 256 

method of administration of 
act, 122 
Misconduct, forfeiture for 

breach of statutory regula- 
tions, 100, 103 

culpable negligence, 100 

failure to use safety appli- 
ances, 100, 103 

injury caused by intention to 
injure self or another, 101, 
102 

injury inflicted by another, 101 

intoxication, 100, 103, 104, 302, 
303 

provisions generously con- 
strued, 105 

provisions in general not un- 
reasonable, 104 

"recklessness," 103 

self-inflicted injury, 100-102 

under ideal law, 301-303 

under Soldiers' and Sailors' In- 
surance Act, 275 

"willful misconduct," 100, 102, 
103 
Misconduct, serious and willful, 
construction of phrase in 
English act, 44 
Model law, German act consid- 
ered, 31, 32 
Montana 

compensation law invalid, 63, 
64 

labor opinion on employments 
covered, 257 

labor opinion on waiting pe- 
riod, 254, 255 



state insurance fund, 141, 155 
Montenegro, compensation law 

enacted, 48 
Mutual Insurance (see Insur- 
ance) 

N 

Negligence, common law liability 

for (see Common Law) 
Nevada 

insurance defects, 158, 159 

monopolistic state insurance, 
139 
Newfoundland, compensation law 

enacted, 49 
New Jersey 

abolition of common law de- 
fenses, 181 

act nominally optional, 180-184 

administration by the courts, 
211-225 

compensation law upheld, 66 

disease not mentioned in act, 
96 

dismemberment award sched- 
ule, 202-203 

effect of presumption of ac- 
ceptance, 182-184 

Employers' Liability Commis- 
sion, 225-228, 230, 231, 188, 
193, 200, 218, 219, 221 

Employers' Liability Act of 
1909, 179 

employments covered, 185-189 

employments covered by com- 
pensation act, 85 

first permanent American act 
in, 178 

forfeiture for misconduct un- 
der act, 102 

insurance features, 207-211 



INDEX 



329 



labor opinion on schedule of 
awards, 251 

labor opinion on waiting pe- 
riod, 121, 122, 255 

maximum and minimum pay- 
ments, 200-202, 205 

medical and surgical aid pro- 
visions, 118 

medical attendance, 198-199 

methods of administration, 109 

new administrative machinery, 
224-225, 232-238 

occupational disease, 189-195 

possible influence of Ives case, 
180 

presumption of acceptance of 
act, 182-183 

presumption of acceptance, 
106 

scheme to avoid constitutional 
objections, 65, 66 

schedule of awards, 195-207, 
249 

time limitation on awards, 203- 
204 

waiting period, 198 

Workmen's Compensation Aid 
Bureau, 225, 227, 228-232, 
234, 237 

Workmen's Compensation Bu- 
reau, 224, 233-238 
New Mexico 

employments not covered by 
act, 94 

forfeiture for misconduct un- 
der act, 102 

method of administering act, 
122 

no waiting period in act, 116 
New York 

commission of inquiry, 53 



distribution of compensation 
insurance among various car- 
riers, 162 

employments covered by com- 
pensation law, 86 

extraterritoriality and the 
courts, 128 

first compensation law uncon- 
stitutional, 59-61 

forfeiture for misconduct un- 
der act, 102 

insurance provisions of act, 136 

labor opinion on methods of 
administration, 262 

labor opinion on waiting pe- 
riod, 255 

state insurance fund, 141, 157, 
158 
New York Central Railroad Co. 

v. White, 79 
New Zealand, compensation law 

enacted, 48 
Noble State Bank v. Haskell, 62 
North Dakota 

labor opinion on employments 
covered, 258 

labor opinion on methods of 
administration, 263 

labor opinion on schedule of 
awards, 252 
Northern Pacific Ry. Co. v. 

Meese, 77 
Norway, adopts compulsory in- 
surance, 47 
Nova Scotia, compensation law 
enacted, 49 



Occupational disease (see Dis- 
ease, Occupational) 



330 



INDEX 



Ohio 

compensation law upheld by 
the Supreme Court, 76 

compulsory principle adopted, 
107 

insurance experience, 156-157 

semi-monopolistic state insur- 
ance, 141 
Oklahoma 

labor opinion on employments 
covered, 258 

labor opinion on methods of 
administration, 262 

labor opinion on waiting pe- 
riod, 254 
Old age insurance (see Insur- 
ance) 
Ontario, compensation law en- 
acted, 49 
Opinion of the Justices, 62, 63 
Oregon 

injuries covered by act, 99 

monopolistic state insurance, 
139 

no waiting period in act, 116 

principle of mutuality in act, 
163 
"Out of and in the course of 
the employment" 

adopted in United States, 94 

construed by American courts, 
95 

construed by English courts, 
40-43 

variations on phrase in some 
acts, 99, 100 
Outworkers 

not covered by some compen- 
sation laws, 92, 94 

would be covered by ideal law, 
300 



Pennsylvania 
labor opinion on occupational 

disease, 260 
labor opinion on schedule of 

awards, 251 
labor opinion on waiting pe- 
riod, 255, 256 
Pensions 

defects of system of (see In- 
surance, Soldiers' and Sail- 
ors') 
to injured German workmen, 
26, 27 
Peru, compensation law en- 
acted, 49 
Philosophic influences, in Ger- 
many, 21 
Porto Rico 
labor opinion on schedule of 

awards, 252 
no waiting period in act, 116 
Portugal, compensation law en- 
acted, 48 
Priestley v. Fowler, 6 
Public Employments (see Em- 
ployments, Public) 



Q 



Quebec, compensation law en- 
acted, 49 



R 



Railroad employees 
excluded from benefits of 

some state acts, 91 
Federal Employers' Liability 
Act, 1906, 51 



INDEX 



331 



Rhode Island, awards under act, 
108, 109 

Russia, compensation law en- 
acted, 48 



Safety regulations, German law, 
27, 28 

Second Employers' Liability 
Cases, 74, 75 

Serbia, compensation law en- 
acted, 48 

Soldiers' and Sailors' Insurance 
Act (see Insurance, Soldiers' 
and Sailors') 

South Dakota 
employments not covered by 

act, 94 
farm and domestic labor not 

covered by act, 89 
limited coverage of disease by 

act, 96 
medical and surgical aid pro- 
visions, 118, 119 

Spain, compensation law en- 
acted, 48 

State ex rel. Davis Smith Co. v. 
Clausen, 61, 62 

State Insurance (see Insurance, 
State) 

Sub-contractors (see England) 

Surgical aid (see Medical and 
surgical aid) 

Survivors' insurance, German 
law, 30 

Sweden, compensation law, 47, 48 

Switzerland 

compensation law enacted, 48 
compensation principle first 
recognized, 20 



Texas 

awards under act, 109 

farm and domestic labor not 
covered by act, 89 

forfeiture for misconduct un- 
der act, 102 

insurance provisions of act, 136 

medical and surgical aid pro- 
visions, 119 
Transvaal, compensation law en- 
acted, 49 



U 



United States 

adoption of compensation laws 
by states, 53-55 

compensation for certain Fed- 
eral employees, 49-50 

compulsory principle adopted 
in act, 107 

dissatisfaction with common 
law rules, 49 

early agitation for workmen's 
compensation, 50, 51, 53 

Employers' Liability Act of 
1906, 51 

Federal Workmen's Compen- 
sation Acts, 1908, 1911, 52 
Utah 

compulsory principle adopted 
in act, 107 

employments not covered by 
act, 94 

farm and domestic labor not 
covered by act, 89 

insurance provisions of act, 
136, 141 



332 



INDEX 



limited coverage of disease by 
act, 96 

medical and surgical aid pro- 
visions, 119 

method of administering act, 
125 



Venezuela, compensation law en- 
acted, 49 

Vocational training (see Insur- 
ance, Soldiers' and Sailors') 



W 



Waiting period 
German law, 27 
in American compensation 

laws, 114-117 
in New Jersey, 198 
labor opinions on, 253-256 
none in some states, 115, 116 
purpose, 115 
two varieties, 115 
under ideal law, 303-304 
War Risk Insurance (see Insur- 
ance, Soldiers' and Sailors') 
Washington 

compensation law upheld, 61, 

62 
injuries covered by act, 99 
monopolistic state insurance, 
141 



no waiting period in act, 116 
Supreme Court upholds law, 
77 
Wisconsin 

commission of inquiry, 53 
injuries covered by act, 100 
insurance experience, 154 
mutual insurance in, 163 
West Virginia 

insurance difficulties, 156 
semi-monopolistic state insur- 
ance, 141 
Workmen's Compensation (see 
other titles) 
acquiescence of general public 

in, 18 
definition, 3 
distinguished from common 

law, 10-12 
early agitation for, in United 

States, 50, 51, 53 
economic basis, 14-17 
Federal acts, 52 
limitations in various states, 11 
Workmen's Compensation Aid 

Bureau (see New Jersey) 
Workmen's Compensation Bu- 
reau (see New Jersey) 
Workmen's Compensation Pub- 
licity Bureau (see Insur- 
ance) 
Workmen's Compensation Serv- 
ice Bureau (see Insurance) 
Wyoming, monopolistic state in- 
surance, 141 



